Evasion spoiling compliance culture, Income Tax will act tough: CBDT

Unveiling the department’s plan of making the life of tax evaders tough in the coming days, Kapur said a new and intelligent database to keep a check on such instances will be brought out later this year and made fully operational by 2016

The menace of tax evasion is “spoiling” the culture of compliance in the country and the Income Tax department will ensure that chronic evaders are not able to get away without facing court cases, a top CBDT official on Tuesday said.

“We try to ensure that our tax regime remains non-intrusive….but there are certain people or cases against whom intrusive action is required. Because not everybody is willingly compliant. We have the powers of search and seizure under the Income Tax Act…we all know that there is large tax evasion happening in certain cases and we have to use that power of search and seizure (to clamp them down).

“We just don’t want to get penalty and unpaid tax from the evader. We don’t want to do that. Because, for us, tax evasion is not only a menace in that sense, it is also spoiling the entire compliance culture (in the country) because the people who are tax compliant feel that the system is unfair,” Central Board of Direct Taxes (CBDT) Chairperson Anita Kapur told reporters here.

CBDT is the apex policy making body of the I-T department.

She added there are chances that by witnessing such a lax system of tax enforcement, even compliant taxpayers would “waver” from their duty saying why should they pay taxes when others can skip it. Kapur added that “demonstrative action” by the taxman is required against evaders.

“This (not catching the evader) will encourage a system where a person who is outside the tax system will continue to remain outside the tax system,” Kapur said adding there was a large tax constituency which is not covered under the Tax Deducted at Source (TDS) regime like for example small traders.

“Such people do not file the return and wait thinking something would be done once the taxman comes calling with a search or a survey. We don’t want that message to go,” she said.

“Our focus should not be collection and it should be taken to a logical conclusion which is that an evader not only pays penalty (on the tax evaded) but also be prosecuted,” she said.

Unveiling the department’s plan of making the life of tax evaders tough in the coming days, Kapur said a new and intelligent database to keep a check on such instances will be brought out later this year and made fully operational by 2016.

“It is called the Income Tax Business Application and once ready, it will vastly improve the data mining and business intelligence of the department and the taxman. It will be a robust database which will include all sorts of financial transactions data of an entity including human intelligence collected on a person or entity,” she said.

Kapur also said the department was on a drive to widen the tax net and is aiming to bring in as many as 25 lakh new assesses under the taxpaying bracket every month.

“I am just trying to say that there has to be deterrence against tax evasion. If my officer is not harsh on a tax evader then I think, you would agree, he or she is not doing their job properly. There is a law in place and there is no place for compassion in law. Law has to be forced fairly and evenly,” Kapur said.

The tax boss said certain tax evaders have the capacity to “create noise” and say that the I-T department is harassing or terrorising him or her but a compliant taxpayer keeps “silent” and goes according to law as they believe a good tax regime is their democratic right.

“It is this belief that we have to live upto,” she said.

Kapur added the I-T department, at present, was bringing only 1 per cent of cases under the scrutiny category and it was trying to bring in a regime where a taxpayer will have the least human interface thereby reducing instances of corruption and emergence of a grievance.

The Chairperson added that the Non-filers Monitoring System (NMS), aimed at tracking those entities which skip filing their returns, will be continued till it achieves the desired result.