Income Tax Current Affairs
The Union Finance Ministry is planning to launch ‘Project Insight’ from October 2017 to monitor high value transactions and detect tax evaders using technology with a view to curbing circulation of black money.
To implement the project government has signed contract with Information Technogolgy major L&T Infotect Ltd. The project will add to list of efforts made by government to curb black money like Operation Clean Money’ after demonetisation, Income Disclosure Scheme, GST implementation, amendment DTAA with other countries etc.
It will use data mining, big data analytics to scoop out tax evaders from social media platforms to deduce mismatches between spending pattern and income declaration. The linking of PAN (Permanent Account Number) with Aadhaar will be key identifier to be used by IT Department to link and analyse various transactions relating to tax payers.
The integrated information technology platform will help in catching tax evaders in non-intrusive manner using technology and without traditional intrusive methods like search and seizure. It will use technology to allow government collate databases of IT forms, IT returns, TDS/TCS statements and Statement of Financial Transactions received from financial institutions.
Its reporting compliance management system will ensure that third party reporting entities like banks and other financial institutions is timely and accurate. It will also set up streamlined data exchange mechanism for other government departments.
It will also be leveraged for implementation of Foreign Account Tax Compliance Act Inter Governmental Agreement (FATCA IGA) and Common Reporting Standard (CRS). IT Department is going to set up new Compliance Management Centralised Processing Centre (CMCPC) for handling preliminary verification, campaign management, generation of bulk letters/notices and follow-up.
Project Insights will play key role in widening of tax base and data mining to track tax evaders. It will help in catching tax evaders in non-intrusive manner like search and seizure. It will help to promote voluntary compliance and also enable taxpayers to resolve simple compliance related issues in online manner without visiting Income tax office.
Income Tax Department (ITD) has initiated Operation Clean Money to investigate tax evaders. As a part of the operation, the government has launched a website on ‘Operation Clean Money’ operation.
The Operation Clean Money’ portal has been designed by the Central Board of Direct Taxes (CBDT). Initial phase of the operation involves identification of around 18 lakh persons who have made large deposits or purchases between 9th November to 30th December 2016, which do not appear to be in line with the tax payer’s profile.
The provision of online verification of these transactions is aimed at reducing the compliance cost for the taxpayers while optimising the resources of the Income Tax department.
The PAN holders can view the information in the portal. The taxpayers would be allowed to submit online explanation without the need to visiti the Income Tax Office. As a reminder, e-mail and SMS will also be sent to the taxpayers for submission of online response on the portal.
The IT department will make use of the data analytics to select cases for verification. After selection of cases, additional information requested would be communicated electronically. On getting the information, the portal will get dynamically updated. The taxpayers covered under this phase are required to submit their responses within 10 days in order to avoid further notice and enforcement actions under the Income Tax Act.
The response provided by the tax payer would be analyzed against available information with the department. If response found justified, the verification would be closed. The verification will also be closed if the cash deposit has been declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).
Operation Clean Money was launched immediately after government’s demonetisation drive in order to bring the tax evaders with undeclared incomes under the tax net. The income tax department has so far identified about 1.8 million persons and asked them o explain their deposits, pay tax or disclose past undisclosed income through the Pradhan Mantri Garib Kalyan Yojana.