Active Stocks
Tue May 21 2024 15:59:52
  1. Tata Steel share price
  2. 174.30 3.81%
  1. NTPC share price
  2. 371.90 1.50%
  1. Power Grid Corporation Of India share price
  2. 325.45 2.71%
  1. Tata Motors share price
  2. 951.15 -0.19%
  1. State Bank Of India share price
  2. 830.55 1.18%
Business News/ Money / Personal Finance/  Income Tax: Taxpayers get intimation for paying lower advance tax
BackBack

Income Tax: Taxpayers get intimation for paying lower advance tax

Approximately 500,000 taxpayers receive notifications from the Income Tax Department regarding low advance tax payments.

Taxpayers warned against no or low advance tax paid.Premium
Taxpayers warned against no or low advance tax paid.

Between April and August of this year, the Income Tax Department dispatched notifications to approximately 500,000 taxpayers regarding “zero" and “lower advance tax payments", as revealed by an official familiar with the situation to Business Standard. These notifications were generated following an examination of “significant transaction" data from the preceding fiscal year and the initial quarter of the current fiscal year.

The department’s analysis highlighted approximately 2.5 million instances in which taxpayers with substantial incomes and significant high-value purchases made little to no advance tax payments during FY23. In numerous instances, the advance tax payments in the first quarter (April-June) of the current fiscal year revealed that taxpayers paid lower taxes in comparison to their substantial expenditures, indicating a discrepancy.

This initiative is being undertaken in anticipation of the second installment of advance tax payments, which is due on September 15. Sources have noted a significant rise in taxpayers evading advance tax payments over the past three to four years, and such actions aim to discourage non-compliance among assesses. Advance tax payments are divided into four installments between June, September, December, and March. These payments are calculated based on taxpayers’ estimations of their expected income and serve as an indicator of potential tax collection in the upcoming months.

Usually, taxpayers make payments amounting to 15 per cent of their tax liability in June, followed by 45 per cent in September, 75 per cent in December, and the remaining balance in March.

Considering that gross tax revenue from April to July only increased by a modest 2.8 per cent year-on-year, and net revenue actually decreased by nearly 13 per cent, the government is actively addressing inefficiencies in the realm of direct taxes.

This strategy serves a dual purpose: It expedites tax collection for the government during the fiscal year and serves as a warning to taxpayers, urging them to fulfill their tax obligations promptly.

Upon scrutinizing pertinent data pertaining to “high-value" purchases, the revenue department may have the ability to estimate potential taxable income based on PAN-linked transactions. In cases where the revenue department identifies that a taxpayer has significantly underpaid their initial installment of advance tax (due on June 15), they may issue notifications to prompt these individuals to make timely and accurate advance tax payments.

Some of the individuals who received these notifications include taxpayers with substantial earnings in sectors like pharmaceuticals, healthcare, and chemicals during FY23, despite projecting comparatively lower income and making lesser payments in the initial installment.

Notifications are also being sent to taxpayers who achieved substantial gains in the stock market in the previous year and acquired high-value real estate and vehicles, revealing a potential disparity between their income and investments.

This divergence could be attributed to various factors, such as a weakening rupee, inflation, elevated interest expenses, and overall high costs leading to lower-than-anticipated income for the fiscal year.

The Department’s authorities are actively seeking information through various channels, including internal data processing (specific financial transactions/annual information statements/tax information statements) based on PAN, with the goal of ensuring that taxpayers accurately report their income in their tax filings.

A “significant transaction" typically refers to a transaction involving the purchase of goods worth lakhs of rupees, a stated turnover of 10 crores, transactions related to immovable properties, withdrawals of cash exceeding Rs 20 lakhs from banks or post offices, credit card payments exceeding Rs 10 lakhs, and similar substantial financial activities.
 

psychometric-widget
Why should you file ITR even with no taxable income
View Full Image
Why should you file ITR even with no taxable income

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed - it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 06 Sep 2023, 11:34 AM IST
Next Story footLogo
Recommended For You