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Govt to track hotel bills to curb tax evasion

P Vaidyanathan Iyer

After credit cards, the finance ministry has now set its eyes on high-value hotel transactions to track individuals in the high-income category.

Senior officials in the revenue department told Business Standard that the objective was to check if the big spenders were part of the taxpayer list and also if they were disclosing the right income.

"The idea is to look at transactions over Rs 25,000," said an official.

The revenue department is also looking closely at transactions that can lead to prospective taxpayers and help expand the tax base, which currently stands at just over 28 million.

According to latest figures, of a population of over 1 billion, there are just 75,000 individuals showing an annual income of over Rs 1 million.

The department is moving quietly to improve the personal income tax collection. It is already in discussions with credit card companies to access their client lists. These will be matched with tax records to check possible evasions.

Tapping tax deduction at source in a more comprehensive fashion is also part of the plan. At present, TDS accounted for over 40 per cent of the income tax collections, officials said.

"The idea is to collect all possible information about the taxpayer and then match it with the tax records. This will give the department an idea of the income of the assessee and his tax liability," an official said.

The department intends to instill fear among tax evaders. While a publicity campaign on these lines may not be the solution, a tightening of rules could result in greater tax compliance. "People will soon come to know about our seriousness," said an official.

The permanent account number of individuals will be a key to match records.

It was possible that several assessees paid taxes at a rate lower than the bracket they belonged to, officials pointed out. Information on the spending patterns of individuals would help the department in tracking this, they added.

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