The revenue department is now looking to seek information from stock exchanges and KYC Registration Agencies (KRAs) on share and stock related transactions.
Revenue Secretary Ajay Bhushan Pandey said in an interview with Business Today, the efforts are to automatically provide the taxpayer information on their capital gains from sale of stocks and mutual funds, dividends, etc so that when an individual is filing income tax returns, he does not have to manually fetch the data from different sources and fill in their returns.
"The whole idea is that it will help the honest taxpayers in preparing their returns so that even by mistake s/he does not forget those transactions in the tax returns. And for those, who earlier used to think how will the tax department know (about the transactions), would know that tax authorities have details of those taxable transactions, and it is better to disclose them in the returns to avoid any complications at a later stage," said the revenue secretary.
The KRAs maintain KYC records of the investors on behalf of capital market intermediaries registered with SEBI.
The revenue department has already started sharing such information among its wings - direct tax, indirect tax and customs departments. The income tax department last year signed MoUs with the market regulator SEBI and MSME Ministry for information sharing. The tax department already receives information on large transactions from banks, mutual funds, etc under Section 285BA of income tax.
The Revenue Secretary said that these efforts have helped the government increase the tax collection efficiency.
Jump in GST collections
Pandey attributes the recent jump in December GST collections in part to such information sharing efforts along with faster recovery of economy.
"Over the past few months, we have made a series of systemic changes in the GST processes itself. The new registrations are now Aadhaar-based so that the fraudulent companies do not get easily registered. We have introduced GSTR-2B under which the invoice-wise and supplier-wise input tax credit, which a particular taxpayer is eligible for, is shown to him by the system so that he does not have to calculate it. This system of auto-populating the input tax credit not only provides a great convenience to the taxpayers, but also acts as deterrent to those who were trying to game the system," said the Revenue Secretary.
GST collection in December 2020 grew 12 per cent year-on-year to Rs 1.15 lakh crore, the highest monthly collection so far.
He also attributed the higher than expected growth in GST collections to anti-evasion steps taken in past two months.
"We have internally developed the capacity whereby we receive data from the income tax department and also the Financial Intelligence Unit (FIU). This information along with the GST returns data, we are able to analyse the outliers and detect those who were indulging in generation of fake bills, and through the chain of intermediaries if these fake bills were being used by the businesses, we are able to locate these beneficiaries as well," said Pandey.
In the whole process during one and half months, 7,000 companies have been identified, 2,000 cases have been filed, and more than 187 persons have been arrested, including managing directors, directors, proprietors and partners of the companies. "Many of the persons who were arrested in last one and a half months are still in jail and because their tax frauds were so serious that they are not able to secure bail," he said.
He also said that faster economic recovery has also contributed to the higher GST collection numbers in December.
The Revenue Secretary did not indicate likely shortfall in tax revenue in the current financial year; he said that numbers from the first three quarters are encouraging.
Citing the example of direct taxes, he said that the till December the direct tax collection is showing a gap of only 9.9 per cent (compared to previous financial year).
"Considering the facts that a good part of the three quarter was badly impacted by the lockdown, and the subsequent tax relaxations given under Atmanirbhar Bharat package like cutting the TDS rates by 25 per cent, a decline of only 9.9 per cent actually shows that there is an improvement in collection efficiency in the direct tax also. We hope that this will continue in the fourth quarter also, and this gap of 9.9 per cent will reduce further," he said.
He also pointed to the fact that customs duty collections have also been strong. "We collected more than 16,000 crore in December 2020, a growth of 94 per cent over Rs 8,300 crore in December 2019," he said.
Vivad Se Vishwas
The government's efforts to garner additional revenue also get a positive boost from the tax amnesty scheme Vivad Se Vishwas, which according to Pandey has received encouraging response from taxpayers.
According to the Revenue Secretary, till December 31, 2020, the 96,000 tax dispute cases involving around Rs 83,000 crore have come for settlement under the scheme, which allows taxpayers to settle disputes by paying 100 per cent of the disputed amount without having to pay the penalty and interest.
The scheme which was open till December 31, 2020, has now been extended to March 31, 2021. "We are hoping more cases will come up for settlement in by January 31," he said.
Taxes under the scheme will have to be paid by March 31, 2021, and the government expects a good collection through this effort.
Meanwhile, Pandey said that the scheme has also helped them clear tax disputes involving an additional Rs 1 lakh crore, which were purely on the books of the government due to "certain apparent errors like certain appeals had been decided but the tax adjustments were not made."
On faceless assessment, Pandey said that by December-end, out of the first lot of 58,319 cases, the CBDT has issued final scrutiny assessment orders in 24,711 cases completely through the faceless system. In 94 per cent of cases, the explanation of the taxpayer was accepted and no additional tax or penalty was imposed. Only in 1,551 cases, concealment or understatement of income was established and addition of income has been made. These numbers dispel the myth that faceless system is causing hardship to the taxpayers.