INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

NEW AIR NORMS SPARE FAT CATS A VISIT TO I-T OFFICE

 DID you wonder that purchasing property worth over Rs 30 lakh, or a credit card bill of more than Rs 2 lakh in a year would mean a mandatory visit to the incometax office? The latest Annual Information Returns (AIR) guidelines issued by the Central Board of Direct Taxes has made it clear that personal presence is not required by tax payers.

   The guidelines are meant to avoid harassment for taxpayers in the expenditure tracking system developed by the department to track the big tax evaders.

   All cases selected for scrutiny on the basis of information contained in AIR during a month will be displayed by the department by the 15th of the following month. The queries made will be specific and to-thepoint, a release issued by the income-tax department says.

   It also says a written reply along with supporting documentary evidence will be sufficient for compliance with the scrutiny notice and the notice itself will carry a mention in this regard. “Personal attendance not essential” will be affixed on the scrutiny notice.

   This means if the information and supporting evidence received in response to a scrutiny notice is sufficient, then the department will not insist on personal attendance of the taxpayer. The Kelkar report on direct taxes had pointed out that the biggest disincentive for taxpayers to pay up was the repeated need to visit income-tax offices. The government has therefore been attempting to put in place a non-invasive system of tax compliance.

   AIR was developed by the tax department to track high value transactions by people. The aim is to link their expenditure with their known sources of income and therefore track if there has been any possible tax evasion. Under the AIR, 6 lakh transactions involving an amount of Rs 13,00,000 crore were reported in 2004-05. The income-tax department would be carrying out scrutiny in these cases. More than 60% of the transactions in 2004-05 were without permanent account number. Since, these would have to be verified, the department has laid out these guidelines.

   Chief Commissioners and Commissioners of income-tax have been asked to fix a reasonable period every day to hear grievances of such taxpayers, if any, without prior appointment and display the same publicly. They may also hold open house meetings in this regard.

   The department will also provide drop boxes for taxpayers who wish to file their grievance in writing and will take steps to redress them expeditiously.