Use of tech, AI aiding direct tax compliance, says CBDT Chairman

The higher buoyancy in direct tax revenue, as outlined in the Budget 2024-25 presented last week, has come mainly on the back of technology along with other measures being taken to plug leakages, Gupta said. “There are a multitude of factors. One is the use of technology for the data which is available with us, and its disclosure to the taxpayer through AIS (Annual Information Statement), and then, we are prefilling returns… we have also done quicker processing, quicker issue of refunds, there is better taxpayer confidence in the tax department. Changes have been made in the law in the sense that whatever were the possibilities of evasion, I’m using this word, they’ve been plugged to a great extent. So the taxpayer is expected to not to resort to those methodologies (for evasion),” he said.

For large-scale variations between the declared income and the financial transactions, the tax department is approaching taxpayers through the e-verification scheme.

“E-verification is also giving some better results in the sense that then the taxpayer is really thinking in what way he or she should have disclosed the real income,” he said.

While the Budget announced withdrawal of outstanding direct tax demands up to Rs 25,000 for the period up to financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15, the income tax department is working separately on resolution of tax demands through its demand facilitation centre (DFC) in Mysuru involving chartered accountants, taxpayers and assessing officers for tax demands of over Rs 1 crore.

“For higher demands of about Rs 1 crore, we have started with the demand facilitation centre…we have a dedicated team of people there who are getting in touch with the taxpayers, their chartered accountant and the assessing officer. So, they put all three at one time (together) seeking their convenience and trying to resolve those matters. At times there could be the case that the assessee has paid the tax but it is not being reflected, it could be that there are appeal effects or rectifications or some petition, which is to be disposed of and the attempt is to correct the demand. Then we can pursue the taxpayer for payment thereof or to see to it that the appeal is quickly disposed of. So, that process is already on,” Gupta said.

The DFC was set up in July 2022 and it has taken up tax demand cases of 1.46 lakh in number so far and the amount of demand has been reduced by Rs 3.57 lakh crore, the CBDT Chairman said.

“It’s an effort to clean the system, to unclog the system and focus the energies for something better,” he said.

On the decision to not extend the concessional corporate tax rate of 15 per cent for new manufacturing units set up after March 31, 2024, Gupta said enough time had been given to such units. Around 3,000 new manufacturing units had opted for the concessional rate of 15 per cent in 2022-23, he said, adding that the number could be higher for the ongoing financial year 2023-24.

The government will take a call on whether or not to give an extension or introduce some new measure for these new manufacturing units at the time of the full budget, which is likely to be presented in July after elections. “The government will take a call at the time of the regular budget, whether it wants to introduce something or not, but as of now, enough extension has been granted from 2019 to 2024,” he said.