I-T dept's get-rich formula: Tap informal sectors

I-T dept's get-rich formula: Tap informal sectors

Investments in co-operative banks, property owners in tax net

 The Income Tax department is looking to increase tax collection in the City by tapping those who have not disclosed their earnings through investments in urban co-operative banks, corporate bonds and co-operative credit societies. 

Taxmen are also targeting those who have not disclosed income earned by renting out residential and commercial spaces. While these two segments are being tapped in Bangalore, the target areas are different in Chennai, Kolkata, Pune, Kochi, Lucknow, Bhopal and Guwahati: money invested in sand mining, timber imports, purchase of residential properties, fees paid to coaching centres and other educational institutions. 

Sources in the department told Deccan Herald, “This started four months ago. Many people deposit money in informal banks and pawn brokers. We want to target them and increase tax collection. Such units can be found in large numbers in residential colonies, near City market and around Majestic area. Most of these people are not registered, but handle huge funds.”

The I-T department will identify them, before investigating their source of income and interest they earn. Through them, the department will get a detailed list of depositors. 

Sources said that nationalised banks and other mainstream banks have been given strict directions by the Reserve Bank of India to disclose all fixed deposit and large transaction details to the I-T department. But these informal institutions do not do so, as many are not even registered. They deal with all sections of society: upscale, middle class and low-income groups. 

Many, including homemakers, deposit money with such brokers, as they pay high interest and these people are trustworthy. They also lend money as and when required without much formalities. The aim is to not only identify parallel bankers, but also depositors and know how much money is going unaccounted. 

They are also targeting property owners. Many salaried employees disclose that they pay rent and while filing I-T returns, the tenant has to share the PAN details of the property owner.

With these PAN details, the IT department is trying to ascertain how much income these owners get and how much they have disclosed. Based on the difference amount, penalty will be decided and notices served, the sources said.