Wilful tax defaulters and potential non-filers will lose out on other government benefits such as LPG subsidy, as per the recent directions issued by the income tax department in its Central Action Plan for 2016-17. After due notice, the names of such defaulters will also be shared with credit rating agencies like CIBIL and may also lead to blocking of PAN in the department’s system so that they are unable to avail tax benefits, it said.
“List of such blocked PANs can be shared with credit rating agencies like CIBIL and banks, so that these defaulters are not sanctioned any loans or overdraft facility by public sector banks, as the same is bound to become NPAs. Further, Ministry of Finance can be suggested to withdraw facility like LPG Subsidy, etc. which are directly credited into the bank a/cs, for the said defaulters i.e. disincentive to be a tax defaulter,” said the Central Action Plan circulated to officers during its conference last week.
List of such blocked PANs can be circulated to Registrar of Properties to ensure that the defaulters are unable to do transactions involving immovable properties, it said. The department already puts the names of wilful defaulters in public domain through the department’s website and newspapers.
The tax department has also asked its officers to impose penalty and initiate prosecution in such cases. The number of non-filers with potential tax liabilities has risen to 58.95 lakh in 2015 from 22.09 lakh in 2014. Non filers in 2013 were 12.19 lakh.
“Ensuring compliance from identified non-filers with potential tax liabilities is key to widening of tax base,” the plan said.
The tax department has implemented the non-filers monitoring system (NMS) as a pilot project to prioritise action on non-filers with potential tax liabilities. “Action under sections 271F (penalty for non-filing of return of income) and 276CC (prosecution for non-filing of return of income) should be taken in appropriate cases,” it said.
Under Section 271F, if a person who is required to furnish a return of his income, as required under sub-section (1) of section 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, Rs 1,000 to Rs 5,000. Section 276CC of the Income Tax Act provides for prosecution, punishable with rigorous imprisonment of three months to seven years and a fine.
This exercise would help in conveying a strong message and assist in improving overall compliance to direct taxes laws, it said. The department has also expressed concern over Rs 62,233.14-crore demand outstanding due to short payment, short deduction, late payment interest and late filing fees.
“Huge demand lying in the records is a cause of concern and is also an opportunity to augment revenue collections. There may be some reason for not pursuing the demand relating to ‘Short deduction’ as the deductee may have paid the taxes,” it said.