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Income Tax dept to focus on credit cards

BS Economy Bureau

The government is in final stages of talks with credit card companies to access their list of clients to match with the income tax records to find out the extent of tax evasion.

The move is part of the revenue department's drive to increase the level of tax compliance in the country. Confirming the move, a top revenue official said the department will target some of the income indicators like credit cards and bank deposits to get a fix on the extent of unreported income.

He said this is separate from the continuing efforts by the income tax department to increase the total number of people who file IT returns.

Outlining the move by the income tax department to go after the high income earners, revenue secretary S Narayan told the All India Conference of Directors General (Investigation) that he expected the department to double the number of income tax payers in the top annual income bracket from about 70,000 recorded last fiscal.

Indicating a massive tax evasion by the upper segment of tax assessees who earn more than Rs 500,000 per annum, he said sale of luxury cars in the country far exceeded the number of tax payers who could afford such cars.

"At present, the annual sales of luxury cars priced at about Rs 600,000 and above were about 70,000 while the total number of tax assessees in the highest income slab was also 70,000," he said.

Narayan also indicated that cash transactions beyond a certain limit in banks would come under the taxman's lens. Sources in the department said the cut-off limit could be between Rs 50,000 to Rs 100,000.

Narayan regretted that banks often did not report such transactions either due to oversight or other reasons.

He said, "what is lacking, is information from banks about movement of funds which are not reported properly."

He also said the department did not keep proper record of past cases of tax evasion.

"Unless we build a database, investigations cannot be carried out. We require a database of at least 10-15 years."

According to him, the tax base should increase to 50 million assessees by 2004-05 from 28 million in 2001-02," Narayan said.

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