Press Release, dated 11-2-2013

What this is

Press Release, dated 11-2-2013 was issued by the Central Board of Direct Taxes on 11 February 2013. Its subject is Government Once again urges all Tax Payers to Disclose their true income and pay Appropriate Taxes within the Current Financial Year.

What it does

Announces the Department's data-matching drive against non-filers and urges taxpayers to disclose their true income and pay tax within the financial year. The Directorate of Systems ran a business intelligence project to identify holders of permanent account numbers who had not filed returns but about whom specific information exists in 148 information codes of the Annual Information Return, Central Information Branch data and TDS and TCS returns, with cash transaction reports of the Financial Intelligence Unit also brought into the matching. That identified 12,19,832 non-filers linked to more than 4.7 crore information records, with rule-based algorithms picking out high priority cases. In the first batch, letters go to 35,170 holders from the Directorate of Intelligence and Criminal Investigation, each carrying a summary of the financial transactions and a customised response sheet asking whether a return was filed, with a nodal cell to capture responses and an online system to monitor follow-up.

Why it was issued

The Government's stated aim of a non-intrusive tax administration, and the position taken by the Revenue Secretary on 10 December 2012 that there is no advantage in suppressing income because the information with the Department will eventually lead it to such persons.

Who it reaches

• Holders of a permanent account number who did not file returns but appear in third-party information
• Recipients of the letters from the Directorate of Intelligence and Criminal Investigation
• Persons reported in cash transaction reports or in annual information returns

The instrument, as the Board published it

Government Once again urges all Tax Payers to Disclose their true income and pay Appropriate Taxes within the Current Financial Year
Press Release, dated 11-2-2013
The Union Finance Minister Shri P. Chidambaram has repeatedly emphasized that there is need for a non-intrusive tax administration to enable the tax payer to file his return and pay appropriate taxes.
In the statement made by the Revenue Secretary to the media on 10th December 2012, he had stated that there is no advantage in suppressing the true income or avoiding paying income tax that is due because, sooner or later, the information available with the Income Tax Department will lead the department to the doors of such persons.
The Directorate of Systems of the Income Tax Department has undertaken a business intelligence project to identify PAN holders who have not filed Income Tax Return and about whom specific information is available in 148 information codes of Annual Information Return (AIR), Central Information Branch (CIB) data and TDS/TCS Returns. Information in the Cash Transaction Reports (CTRs) of FIU-IND has also been included as part of this data matching exercise. This data analysis has identified target segment of 12,19,832 non-filers linked to more than 4.7 crore information records. Rule based algorithms have been used to identify high priority cases for follow-up and monitoring.
In the first batch, letters are being sent to 35,170 PAN holders by the Directorate of Intelligence and Criminal Investigation. The letter contains the summary of the information of financial transaction(s) along with a customized response sheet and seeks to know whether the person had filed his Income Tax return or not. A Nodal cell has been set up to capture the response and take follow-up action. There will be an online monitoring system to ensure follow-up action and track return filing and tax payment of the target segment.
The Government would once again urge all tax payers to disclose their true income and pay appropriate taxes within the current financial year.
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What to watch

• The letter is a request for a response, not a notice under the Act, but the response sheet becomes part of the record and the follow-up is monitored.
• The information codes span the annual information return, Central Information Branch data, TDS and TCS returns and cash transaction reports, so a transaction reported by a bank or registrar can surface years later.
• This is a press release describing an administrative exercise; the assessment or reassessment that follows proceeds under the Act.

Where you meet it

When a client receives a non-filer letter carrying a summary of his financial transactions and a response sheet, ahead of any notice under the Act.

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