In the 2017 budget speech, finance minister, Mr Arun Jaitley revealed these startling facts

• Only 3.7 crore individuals in India filed income tax returns in 2015-16
• Close to 99 lakh people were below taxable income.
• Out of these, only 24 lakh people declared income above Rs 10 lakh, reported earnings above Rs 50 lakh were only 1.72 lakh.
• In last 5 years, automobile companies have sold 1.25 crore cars.
• In 2015, nearly 2 crore people travelled abroad for the purpose of business and tourism.

The data above highlighted that there are many tax evaders in India.

The Government expects demonetisation to bring in some significant long-term benefits that include:       

• Lower corruption;
• Increase in digitalisation;
• Transparency;
• Formalisation of the economy, and eventually
• Flow of domestic savings into productive sectors of the economy (through banking channels).

All this is expected to make the GDP growth more tangible, transparent and better. Post-demonetisation, the Government is hopeful to identify tax evaders and shore up the tax revenues.

Post demonetisation, the open secret in the Income Tax Department (ITD) is, they have a large volume of data that needs to be decoded, processed, scrutinised with high-end data analytics and acted upon, but insufficient numbers in skilled human resources.   

On January 31, 2017, the ITD set in motion ‘Operation Clean Money’. It is believed that, out of 1 crore accounts examined by them, 18 lakh individual bank account holders tax profile doesn’t justify the amount they deposited between November 9, 2016 and December 30, 2016. The ITD has already sent out notices to suspected tax evaders seeking an explanation from them. The response can be filed online, and there wouldn’t be any human interaction at this level. ITD has provided 10 days as the reply time.

If the explanation and sources of cash provided by the suspect are found justified, he/she would be absolved, and ITD won’t initiate any further action. This holds true in case such a person has declared cash deposited under Pradhan Mantri Garib Kalyan Yojna (PMGKY).           

But, if the department is not satisfied with the explanation, it may demand further information.

The Union Budget 2017-18 has offered more powers to the tax officials and has clarified some doubts as well.

The Finance Bill, 2017 amended Section 132 and 132A (that deal with search and seizures), thereby inserting an explanation of not revealing the reasons recorded by the Income Tax officials for believing or suspecting an assessee in Search and Seizures operations to any person or any authority or the appellate tribunal. The amendments shall be deemed to have been made in retrospect, since they came into force.

The Finance Bill, 2017, conferred additional powers to Joint Director, the Deputy Director, and the Assistant Director while dealing with Search and Seizures. This might arm the ITD with more teeth to apprehend tax evaders including Trusts, and help the Government increase its revenue.  

It’s noteworthy that the advance tax collection in the personal income tax segment has risen 34.8% in first 3 quarters of the Financial Year (FY) 2016-17.

Some other important announcements made in the Budget 2017-18 are…

• There will be a late fee for not filing income tax return in time from the Assessment Year (AY) 2018-19. If the return is filed any time after the due date but before December 31, the penalty of Rs 5,000 will levied, and after that the penalty will be Rs 10,000.  For those earning less than Rs 5 lakh, the penalty amount will be capped at Rs 1,000.
• Further, the time given for filing revised returns has also been reduced. Now you can file revised return any time before, the assessment is completed, or the AY ends, whichever is earlier.
• Any transaction made in cash over Rs 3 lakh may now attract a penalty of an equivalent amount.

PersonalFN is of the view that, filing I-T returns or any other tax returns for that matter, is a constitutional duty and earns for you the dignity of consciously contributing to the development of the nation and improves the standard of  living for its citizens. Even if you aren't earning a ‘taxable income’, it is always advantageous to file this  and recognise the possible perils cited in this article. Filing tax returns on time allows you to live stress-free and adds to your morality.

So far, India’s black money is faceless and perhaps fearless too. The common man hopes that the faces hiding behind curtains will be exposed soon followed by appropriate action taken against tax dodgers and those with mighty sums of unaccounted money.

We must consciously move towards becoming a tax compliant society, which can in turn help in India’s economic development.

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