Government is planning to identify the tax defaulters and will take measures to bring them under the tax net. People who spend their income on luxury goods and sizeable amount in the hotel bills are also asked to file their income tax return. The government earlier this year, have made it mandatory for people who are paying electricity bill over Rs 1 lakh in a year and who have an expense of over 2 lakhs in foreign travel or trip should file their returns.
The new proposed additions made in the list of high-value transactions will be used by the department of tax to identify those who avoid the filing of income-tax returns or underreport the income amount even if they file returns, a source in finance ministry have stated. But anyhow they have clarified regarding it that the responsibility of reporting such transaction held won’t be on the taxpayers but the third parties to the IT department. These specified transactions will comprise the purchase of jewellery, white goods, paintings which are valued over Rs 1 lakh, payment of educational fees or donations above Rs 1 lakh per annum, life insurance premium above Rs 50000, payment to hotels and resorts above Rs 20000 and electricity consumption above Rs 1 lakh per annum. These are the specified financial transactions and would appear in a taxpayer’s form 26A.
There are sources which claim that the IT department has an SFT report given by third parties regarding the people who undertake huge financial transactions and still do not pay the tax and file IT returns. A person who pays more than Rs 5 lakh as a school fee per annum and still does not file IT return by claiming that he does not have taxable income is dodging the system and similarly, a person who can afford to pay the huge luxury expenses in a hotel should be capable of paying tax. It is the responsibility of every citizen in the country who enjoys public goods to pay the tax without any default. The reports given by third parties will let the IT department nudge the people who are failing to pay taxes even after having a sizeable income. This decision is going to help the government in raising the revenue as the pandemic has hit hard. There should be strict vigilance and appropriate action should be taken against people who try to deceive the system.
