I-T to scan tier-II cities to bring more people in tax net

The Income Tax department has decided to use technical intelligence and pay special focus on tier-II cities like Jaipur, Surat and Lucknow among others, to bring more and more people living in these "progressive" cities under the tax net.

The new plan is expected to be set in action as early as next month and is part of the governments' recent directive to the taxman and its apex policy making body CBDT to bring in at least 25 lakh new assesses under the tax ambit every month.

The department, senior officials privy to the development said, "will unleash the power of its smart-technical intelligence and business computation databases to tap on these potential entities and ensure that the overall tax regime remains non-adversarial and non-intrusive while undertaking this task".

These strategies to "significantly expand the tax base" will be discussed threadbare as a key point by the top brass of the I-T department and Central Board of Direct Taxes (CBDT) during their two-day annual conference begining here tomorrow.

Finance Minister Arun Jaitley will inaugurate the meeting held traditionally over the years.
"A trend analysis done by CBDT and other agencies point towards the fact that the tier-II cities have a very large untapped potential in terms of getting more individuals and entities to come under the tax paying bracket," the officials said.

These cities are seen as progressive on the revenue front.

"The department has decided to undertake this task in a mission mode," a senior I-T officer said.

CBDT Chairperson Anita Kapur had indicated the taxman's intention in this regard when she recently wrote to the field offices of the I-T department that the "number of existing income tax payers is low compared to the potential and the gap between the potential and the actual tax payers appears to be wider in the case of tier-II cities and towns.

"Considering the priorities of the government and the need to widen the tax base, a concerted and focused effort in mission mode is required.

"We have to strive for adding at least 25 lakh new assesses per month during the current financial year," Kapur wrote.

The tier-II cities include Surat, Nagpur, Lucknow, Vadodara, Jaipur, Pimpri-Chinchwad, Indore, Chandigarh, Gurgaon, Rajkot, Bhopal, Kanpur, Thane, Visakhapatnam, Faridabad, Kalyan, Navi Mumbai, Ghaziabad, Ludhiana and Nashik among others.

"These are some prominent cities and not the exhaustive list. There are about two dozen more such cities which will be foccused on," the officer said.

Officials said the department has decided to bolster its Non-filer Management System (NMS) which works to analyse all technical and physical databases of in-house and third-party information available with the department to identify people who have not filed returns even though they have carried out large-value financial transactions.
The government collected Rs 4,733.61 crore in taxes since 2013 till March this year because of the NMS-based special drive.

The officer said that while there is a big worry over the existing small taxpayer base of about 4 crore taxpayers, the government has also set a daunting target for the department to collect Rs 7,97,995 crore revenue during the current financial year, which is 14.66 per cent higher than the actual collections of Rs 6,95,988 crore during 2014-15.
"The government wants to usher in a number of social welfare initiatives for citizens but if the taxpayer base is such low numbers as it is today, big and ambitious goals cannot be achieved," the officer said.

I-T units working for assessment and investigation have been asked to play an active role in achieving these ambitious goal of tapping new taxpayers and avenues for revenue generation.

"Officers of these units have been asked to prepare strategy papers and presentations to suggest methods to achieve the new target set by the government during the conference keeping in mind the government's policy of a non-adversarial tax regime," the officer said.

CBDT Chairperson Kapur has already asked I-T field formations to "forthwith" focus their attention on this subject and "deploy and activate" their officers in achieving this herculean target.