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Taxpayers don't have to file high value deal details in ITR

Source: ANI
August 17, 2020 10:50 IST
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There is no proposal to modify income tax returns forms, finance ministry sources clarified when asked to comment on news reports that the purported statement of financial transactions expansion would result in the filing of high-value financial transactions in ITR by the taxpayers themselves.

Stating this understanding was "totally misleading", the sources said that it was a false conclusion. The taxpayer would not need to mention high-value transactions in the return, but that their reporting to the income tax department is to be done by the third parties under the Income Tax Act.

Also, it is the most non-intrusive way to identify those who spend big money on various items such as business class air travel, foreign travel, spend big money on expensive hotels, send their children to expensive schools and yet do not file income tax returns claiming that their income is less than Rs 2.5 lakh per annum.

 

According to finance ministry sources, the Income Tax Act already provides for quoting of PAN/Aadhaar for certain high-value transactions and their reporting by the third parties mainly for the purpose of the widening of the tax base. Currently, for example, information regarding high cash deposits/withdrawals in bank accounts, purchase of shares, mutual funds, purchase of immovable property, etc are reported to the I-T department by the third party.

Sources said that such reporting of high-value transactions is essentially to identify persons who avoid filing of income-tax returns and paying income-tax besides high spending in their day-to-day life. It is an open fact that in India only a tiny segment of people pays taxes and all those who should be paying taxes are actually not paying their taxes. This fact was highlighted by the prime minister also in his speech on August 13, while launching the platform "Transparent Taxation - Honoring The Honest".

Sources said the income tax department is relying more and more on voluntary compliance and therefore it becomes essential to identify tax evaders and for that purpose expenditure data collected from third parties through SFT is the best and most effective non-intrusive method.

Any purported extension in the present list of SFTs, as reported in the media, is certainly not going to impact or affect the taxpayers as they are not required to file details of high-value transactions in their ITRs.

Sources said if the department does not collect this information, it would not be able to identify the persons who are liable to pay tax but are avoiding or evading the same. This would be a great injustice to the honest taxpayers who are paying their taxes diligently.

Also, widening of the tax base would provide more fiscal space to the government to lowering the tax burden of the honest taxpayers. Hence, identifying non-filers through a non-intrusive method of collecting information on high-value transactions from a third party is also a step in the direction of "honoring the honest".

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Source: ANI
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