Financial Daily from THE HINDU group of publications
Tuesday, Jun 04, 2002
Industry & Economy - Income Tax
Rampant under-reporting of income suspected -- Non-salaried class comes under I-T Dept scrutiny
NEW DELHI, June 3
THE Finance Ministry has decided to zero in on non-salaried tax payers individuals and HUFs to check rampant under-reporting of income by this segment, to bolster revenues.
The revenue department's analysis on the profile of income-tax returns filed in 2001-02 has revealed that only around 8.34 per cent of non-salaried tax-payers are in the income range of Rs 1.5 lakh to Rs 5 lakh.
A break-up indicates that just 6.6 per cent of non-salaried tax payers filed returns showing income in the range of Rs 1.5 lakh to Rs 2 lakh. Further, a mere 1.74 per cent of income tax assesses are in the income range of Rs 2 lakh to Rs 5 lakh and 1.14 per cent in the income range of Rs 5 lakh to Rs 10 lakh in the non-salaried category.
In contrast, nearly 25 per cent of salaried tax payers have filed I-T returns showing an income in the range of Rs 1 lakh to Rs 5 lakh.
"The large variation in the number of IT returns filed in the higher income bracket between salaried and non-salaried tax payers seems to suggest that there could be under-reporting of income by non-salaried employees," said a senior Finance Ministry official.
Supporting evidence has come from surveys conducted by the Income-Department, which have pointed to the possibility of under-reporting of income by the non-salaried segment based on the nature of transactions. A large chunk of transactions are cash transactions which go unreported.
The analysis done by the Central Board of Direct Taxes (CBDT) shows that close to 79 per cent of non-salaried tax payers filed income-tax returns showing income below Rs 1 lakh. The percentage of salaried tax payers in this segment stood at around 46 per cent.
Close to 44,23,206 lakh non-salaried tax payers (36 per cent) filed returns showing an income of Rs 50,000 per annum. The number of non-salaried tax payers showing income of Rs 50,000-60,000 per annum and Rs 60,000 to Rs 1 lakh per annum stood at 22,88,954 lakh (18.98 per cent) and 28,18,162 lakh (23.37 per cent), respectively.
In fact, only last week the Finance Minister, Mr Yashwant Sinha, directed I-T officials to go beyond the "one by six scheme" such as tracking the ownership of lockers and tapping Yellow Pages to check evasion.
"Bringing more non-salaried class under the tax net would also help abate criticism from the salaried class which reckons that they are being unduly targeted by the Government," said official sources.
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