Beware: Taxmen are watching your splurges everywhere — from malls to SUVs

FP 29 July 2014

In a desperate attempt to meet its revenue collection target for the current fiscal, the finance ministry has directed tax department to collect information about big spenders in specific categories in eight cities which include Bangalore, Kolkata, Chennai, Kochi, Pune, Guwahti, Bangalore, and Bhopal.

According to a report in The Hindu BusinessLine, in Guwahati for example, tax sleuths will collect information related to high personal expenses, whether it is in shopping malls, educational institutions, coaching centres or on homes, while in Kolkata, expenses incurred by film/television serial/media content producers will be under the I-T lens.

Meanwhile in Lucknow those purchasing a luxury car or an SUV may have some explaining to do if the income shown in their tax returns is not in line with the high-value transactions and in Kochi, new projects include houseboats and capital gains on land sold to the Vizhinjam International Seaport.

In Bangalore, interest from investment in urban cooperative banks or credit cooperative societies is under scrutiny and in Chennai, mining projects and timber imports are under scrutiny.

A report in The Times of India also said tax authorities are keeping close watch on compensation paid to top company executives, including their allowances and perks, and income from  fixed deposits in order  to unearth concealed income.

The Income Tax Department has detected undisclosed income worth Rs 1 lakh crore in the financial year 2013-14, which is more than double the figure seized by the tax sleuths during raids to unearth black money in 2012-13.  The action was conducted by the I-T department against individuals, business firms, corporates and other financial institutions to check tax evasion.

Earlier this month, finance minister Arun Jaitley said those evading taxes will be dealt with firmly and asked tax officials to go all out to unearth black money in the country.

Following the FM's directive, the income-tax department drew up a plan to widen the tax base by going after non-filers, using annual information returns, capturing new information sources such as under-reporting of immovable property and buyback of shares through open offers and exchange of information with other countries through tax treaties, says this Economic Times report.

So not showing multiple fixed deposit accounts while filing tax returns, educational institutes giving honorarium to their guest employees and passing off the employees as consultants to save TDS will be highly scrutinised by the tax department.

The direct tax collections for the current fiscal has been pegged at Rs 7,36,221 crore and the FM is certain  it will l be achieved.