BackCBDT aims to add 12% more tax return filers this fiscal
The CBDT also plans to expedite disposal of high-value income tax appeals under the faceless mechanism.
PremiumBENGALURU, NEW DELHI : The Union government is looking to widen the tax base by targeting addition of 12% more new return filers this fiscal against 8% in FY22, an official document showed.
According to the Central Action Plan (CAP) for FY23 circulated internally by the Central Board of Direct Taxes (CBDT), the department also plans to expedite disposal of high-value income tax appeals under the faceless mechanism.
Mint has seen a copy of the document that gives strategic direction to tax officers for the year ahead in terms of targets and deliverables.
The CBDT has asked field officers to use data mining, data analytics, inputs from market associations and trade bodies to identify non-filers, and directed its directorate of systems to provide data on non-filers and those who have stopped filing by 30 September.
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The growth of new return filers peaked in the year after demonetization, but fell sharply a year before covid. New filers’ growth stood at 17.7% in FY17, 19.79% in FY18 and 17.58% in FY19, before it fell to 10.6% in FY20, 10.18% in FY21, and to 8% in FY22. However, direct tax collections have been robust over the last two years, growing 49.02% in FY22 to ₹14.09 trillion from ₹9.45 trillion in FY21. A new filer is defined as a person, who is not included in the filer base at the start of the year, but has filed a return during a fiscal year.
The latest action plan focuses on reducing demand for arrears and better litigation management. It talks of full disposal of appeals of ₹50 crore and above, and lays down a target of disposing of 400 appeals by each commissioner of income tax (appeals) in FY23 and at least 100 appeals per quarter.
This comes amid concerns of a slowdown in disposal of appeals under the faceless system, leading to uncertainty among taxpayers. The number of appeals filed with the department under faceless mechanism rose to 438,000 as on 1 April from 398,000 last year. The plan also talks of disposing of at least 90% of appeals cases filed prior to 31 March 2017.
“The focus on speedy disposal of pending appeals, especially those pending at CIT (appeals) level is very much needed. The rate of disposal has considerably gone down after the introduction of the faceless appeals scheme, resulting in a massive surge in the number of pending appeals. Apart from helping the tax department in collecting arrears stuck up in these litigations, it will also help the taxpayers in getting unsustainable demands set aside and expedite consequential refunds," said S. Vasudevan, executive partner, Lakshmikumaran and Sridharan Attorneys.
Arrears demand raised by the tax department, which rose by 25% in 2021-22, has been targeted to reduce by 60% to ₹7.3 trillion this fiscal. The CBDT has also specified timelines for various services to taxpayers. These include issuing refunds within three months of processing a return, decision on rectification application within six months, issuing tax clearance certificate within a week, and early responses to grievances.
A spokesperson for CBDT did not respond to queries emailed on Wednesday.
“These are very welcome initiatives that will bear fruit in the near future as they bring in more accountability among tax officials," said Om Rajpurohit, director, AMRG & Associates, an accounting firm.
The number of taxpayers has grown to 91 million from 50 million a few years ago, according to finance minister Nirmala Sitharaman.
“With the objective of widening the tax base, the government has introduced many measures in the recent past in the form of new tax deduction (TDS) provisions, higher TDS for non-filers of returns and non-quoting of PAN, etc. In addition, automatic exchange of information available on the GST portal has enabled the income tax department to identify potential tax defaulters. In this background, it is not surprising that the tax department is targeting to increase the new filers significantly in the current year," said Vasudevan of Lakshmikumaran & Sridharan Attorneys.
Meanwhile, the government has implemented the non-filers monitoring system (NMS), which assimilates and analyses in-house information as well as transactional data received from third-parties to identify such persons/entities who have made high-value financial transactions with potential tax liabilities but have not filed their returns.
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