Stating that it is not a “fishing expedition”, Union Finance Minister Nirmala Sitharaman on Monday said over 1,00,000 income tax notices sent to taxpayers based on understatement of income or non-filing of taxes will be wrapped up by March 2024. While pointing towards the “lingering memory” of discretion used by a few income tax officials, Sitharaman stressed on the importance of perception of the tax department and asked officials to introspect on their behaviour with assessees, and at the same time assured taxpayers of a transparent, responsible, objective and taxpayer-friendly regime.
Speaking at the 164th Income Tax Day celebrations at Delhi, Sitharaman said for India to reach the goal to become a developed nation by 2047, the country will have to keep the growth momentum and a widening of the tax net would be required through a “nudge”, campaigns or through levies like TDS/TCS (Tax Deducted at Source/Tax Collected at Source) which “track and trace” and are not additional tax levies.
The Finance Minister said assessments are being reopened only till six years and within this timeframe also, cases have been reopened and notices have been sent after fourth year and before sixth year based on two categories — where information is available that the income has been understated, or where there are non-filers and information is they should have been filers.
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“About 1,00,000 notices were sent…these are not just being thoughtlessly sent…by March 2024, this entire 1 lakh will be cleared. That set of notices which have been issued based on the information that we have for those whose incomes are more than Rs 50 lakh, the notices and the treatment or assessment will all be completed by March 2024. Post which every year 4th and 6th year, notices will continue. The process will be now rather more predictable…it is no longer a fishing expedition.”
Sitharaman further said that the Central Board of Direct Taxes (CBDT) in May 2023 completed scrutiny assessment of the 55,000 notices which had been sent pursuant to a Supreme Court ruling. “The Board today is not sitting over notices which have been issued and ….it is not a place of discretion, it is not a place where people are gaming the system… there is a clear cut approach,” Sitharaman added.
The government has not hiked income tax rates yet tax revenues are increasing due to the efficiency of the Income Tax Department, she said. “No rate hike but hand holding and supporting assessees wherever required… we are looking at assessees as wealth creators,” she added.
She assured taxpayers that the CBDT and the field formations are conscious that they are working towards a transparent, responsible, objective and taxpayer friendly regime where very clearly the targets are before them. She said all can work together towards widening the tax net and having a friendly tax regime.
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“Even today, widening (the tax net) is an issue we are talking about. What will work? Nudge will work, campaigns will work…that’s why TDS and TCS are always talked about, they are not new additional taxes, just track and trace. Therefore, there is a need for all of us to look at the Indian economy and see how best we can contribute towards building a developed India by 2047,” she said.
Pointing out that it’s always the perception which matters, Sitharaman said though the department has become tech-savvy, a certain perception of discretion remains which the tax department needs to work upon as they are the face of the government while dealing with tax assessees.
“In this 164th year, it wouldn’t be at all late or it wouldn’t be too early to tell ourselves what is the perception about us. We are very efficient, we are tech savvy, we are very dedicated to our jobs, we have shown performance even as the economy is reviving post-Covid…faceless technology has fitted in well, it has brought transparency but it is taking time for the perception to also change that much…but even today there is a lingering memory of a few who had used discretion, a few I repeat, as a result of which the impression about the department about the way in which it functions, that lingering memory is still there in a few assessees, I won’t say all. I would appeal to all of us…at a time when we are aspiring to be a developed India by 2047… let us ask ourselves how we are perceived?…just ask that question to introspect.”