Fin Min Is Watching: Pay Your Taxes, File Your ITR

It seems that the carrot-and-stick approach by the Finance Ministry to weed out income tax defaulters is working after all. While on one hand, the Finance Minister is continuously urging asseessees to pay appropriate taxes and disclose their true income, and on the other, the ministry is busy devising methods to bring defaulters to book.

The follow-up action and return filing tracking exercise that was started in February 2013 has borne fruit, with over Rs 600 crore collected in the form of self assessment tax and advance tax from the “target segment” in the last 3 months. Enthused by the response of this exercise, the Finance Ministry has set up a compliance management cell and 70000 more letters is being dispatched to the target segment assessees during the current month.

As per a press release, the Ministry has already dispatched 35000 letters to those priority cases whose names have emerged in the business intelligence project of the Directorate of Systems to identify PAN holders who have not filed income tax returns and about whom concrete information is available in the Annual Information Return (AIR), Central Information Branch (CIB) data and TDS/TCS returns. Other information regarding cash transactions was also included for the purpose of data matching of around 4.7 crore records. On the basis of that, around 12,19,832 assessees have been identified over the last 3 months as having failed to file their ITR. Further shortlisting of high priority cases has been done using this data, by following algorithms for follow-up exercise and monitoring.

At the first instance, letters were issued in batches around 3 months ago to collect information about the assessees. “Letters were sent in three batches to 1,05,000 high priority cases seeking to know whether the person had filed his Income Tax return or not. The letter contained the summary of the information of financial transaction(s) along with a customised response sheet”, the press release notes. Taking a cue from the fabulous response to this initiative, the ministry has decided to send out another 70000 letters during this month. Also, in a bid to scale up this follow-up exercise, a dedicated compliance management cell has been set up by the ministry to ensure “follow-up action and track return filing”.

Now, the Income Tax department has mooted the idea of a comprehensive data warehouse and business intelligence (DW&BI) project. The project will develop an integrated platform for effective utilisation of available and assessable information to promote voluntary compliance, deter non-compliance and impart confidence that all eligible persons pay appropriate tax. It will integrate enterprise data warehouse, data mining, web mining, predictive modelling, data exchange, master data management, centralised processing, compliance risk management and case analysis capabilities.