PM Modi to tax dept: How do you plan to use info against evaders, non-filers?

“In the meeting, PM asked about the 18 lakh communications, what were the responses and how does the department plan to act against those who did not respond. He also asked about how the tax department plans to use the information database to catch hold of tax evaders,” one of the officials cited above said.

In the meeting, which was originally scheduled to last 30 minutes but got extended to 105 minutes, Modi is learnt to have advised the tax department to adopt a more friendly approach in its outreach with taxpayers, terming the existing approach as aggressive. He, however, was of the view that some process should be developed for naming and shaming big tax evaders in every region of the country. “He suggested if there could be a way to list out big tax evaders in every region and then initiate action to name and shame them,” the official said. The Prime Minister, however, also warned the tax department against reports of corruption, asking them to keep their performance record clean, another official said.

Modi also discussed preparedness for the rollout of Goods and Services Tax (GST), the country’s most ambitious indirect tax regime since Independence, which the government intends to implement from July 1. The Prime Minister also spoke in favour of e-assessment, the facility of e-mail based paperless assessment proceedings to limit interface with tax officials. The facility is already available in seven cities and the Prime Minister asked the tax department to extend the same to all state capitals. On the specific query regarding whether there was any discussion in the meeting related to any plan to tax agricultural income, CBDT officials said they were not aware of any such development.

Following the dismal collections under the government’s compliance window of Pradhan Mantri Garib Kalyan Yojana (PMGKY), the tax department, backed by information of cash deposits over Rs 2 lakh that do not match past profiles of taxpayers, is now focusing on nabbing those tax evaders who did not opt to come clean under the scheme. Over 60,000 individuals, including 1,300 persons, are under scanner of the Income Tax department in its second phase of ‘Operation Clean Money’. Also, a list has been readied of about 1.37 crore non-filers with potential tax liability that have been identified under the department’s Non-Filer Monitoring System.

As part of the first phase of the ‘Operation Clean Money’, launched on January 31 this year, the department had sent communications to around 18 lakh individuals asking them to respond online to specific queries relating to cash deposits made during November 9-December 30, the time period given for deposit of scrapped currency notes in banks. Out of the 17.92 lakh persons to whom the queries were sent by the tax department under the first phase of operation Clean Money, 9.46 lakh persons responded had responded to the department as per pre-defined parameters of sources of the cash deposits.

Under PMGKY, the compliance window provided for people to come clean with their unaccounted cash and deposits after demonetisation, the government managed to garner only Rs 2,300 crore as tax, penalty and surcharges. The total collections under PMGKY scheme are likely to see upward revision as the deadline for deposits was extended till April 30. Under Income Declaration Scheme, which was the government’s first tax compliance window from June 1-September 30 last year, the response was better with Rs 12,700 crore collected through two installments of tax and penalties in 2016-17 and an equal amount expected to flow into government coffers this year.