The government sent about 4.4 million “targeted” emails to people who had “wide gaps” in the transactions on their accounts and the income they disclosed during last year’s tax filing cycle, a senior official has said, the first time the income tax department delivered forewarnings to help people avoid being sent a tax notice.
The email were sent over the tax returns filed during the 2023-24 assessment year, which pertained to people’s incomes in the 2022-23 financial year.
“These emails are targeted at large discrepancies and not small ones,” Central Board of Direct Taxes (CBDT) chairman Nitin Gupta said.
The email has a simple message pointing out that the taxpayer’s income as shown in his or her return is not commensurate with the return income filed with the income tax department, hence the assessee needs to file a revised return, Gupta said. CBDT, an arm of the Union finance ministry, is responsible for administration of direct taxes, including the income tax.
The first deadline to file a return is usually July 31 and people have time to file revised returns till December 31. Those who missed filing their original returns by July 31 could also do so by December 31 by paying a penalty of up to ₹5,000.
According to experts, a tax notice is more stringent and may lead to a scrutiny and penalties calculated as a proportion of the pending due.
Gupta described the email cautioning system as in step with the government’s ‘ease of doing business’ and ‘ease of living’ initiatives. He said the department is lenient on unintended lapses by taxpayers and prompts them regarding unintentional omissions of any income while reporting to the department.
The chairman said there are also cases of non-compliance due to lack of awareness, but there are other types of cases, which are deliberate and fall in the category of tax evasion.
On cases where people do not disclose their income deliberately, there is “enforcement actions we do take, which are giving us good results”, Gupta said.
The e-mails, he explained, were for a third category.
“There is one more category, which is slightly different from these two, is that the taxpayer is filing return, but income therein is not commensurate to the financial transactions the taxpayer has undertaken. For example, purchase of a property, financial transactions of securities or mutual funds. For such cases, we are also applying two methodologies, one is, e-verification scheme. Where, for the old cases, we put the differential… and request him to give explanation/response to that,” he said adding that extreme cases could be picked up for scrutiny.
“We sent out targeted e-mails for the assessment year 2023-24, before the last date for filing the revised returns, so that the tax payers could file revised returns.”
Gupta said ease of compliance and use of technology have made the taxation system transparent and efficient, and has checked evasions significantly, which helped the government mop up high direct tax revenue.
Robust tax collections prompted the finance minister to raise CBDT’s target from ₹18,23,250 crore ( ₹9,22,675 crore in corporate income tax or CIT, and ₹9,00,575 crore personal income tax or PIT) in 2023-24 BE (budget estimate) to ₹19,45,000 crore in 2023-24 RE ( ₹9,22,675 crore CIT and ₹10,22,325 crore PIT).
“We will try to achieve the RE (revised estimate) target as we still have two more months. We don’t know what will be the inflow of advance tax or TDS [tax deducted at source], but we will make an endeavour to achieve this it is achievable,” Gupta said.
He is also confident about the next financial year (FY25), where the BE target for CIT is ₹10,42,830 crore and PIT is ₹11,56,000 crore. The total ₹21,98,830 crore in BE of FY25 is 13% higher than RE 2023-24 and over 20.5% more as compared to BE of FY24.
“It is realistic and achievable,” Gupta said while pointing at robust GDP growth. Despite global headwinds such as conflicts in Ukraine and Gaza and the Red Sea trade disruption, India’s first advance estimates of growth released on January 5 projected a higher-than-expected GDP growth of 7.3% in FY24. A finance ministry report released two days before the interim budget said India will remain fastest growing major economy in 2024-25 with real GDP growth likely be closer to 7%.