Home > News > India > Tax searches remain high in FY20 as officials tap goldmine of data

NEW DELHI: The Income Tax department has kept up the heat on suspected tax evaders in FY20 with close to 900 searches till January, relying heavily on data captured from an increasingly digitised economy to profile risky assessees.

Information obtained from the finance ministry showed, between April and January the department searched 893 groups, a tad lower than the 983 searches in entire FY19. Many of these searches were on real estate developers, jewellers, hawala dealers, people into liquor and mining businesses and entities into financial services and metal processing units.

In these two years, the number of IT searches, or raids in lay man’s parlance -- a term not defined in Income Tax Act, has stayed significantly higher than the 582 searches held in FY18 and 447 conducted in FY16. In FY17 -- the year of demonetisation -- searches had peaked at 1152, the data showed.

What aided the department to zero in on potential cases of tax evasion is the increased availability of data on transactions in the economy obtained through the policy of requiring Permanent Account Number in the case of many large transactions, limits on cash transactions and the requirement of tax deducted or collected at source on a variety of payments. Information obtained from the Goods and Services Tax (GST) authorities too helped in stepping up enforcement measures. “We act strictly within the parameters laid down in the law," said a tax official, who spoke on condition of anonymity.

Mint had reported on 2 March citing official figures that the number of ‘surveys’ -- a more benign form of enquiries made by tax officials -- too had jumped sharply from 4,428 in FY16 to 15,401 in FY19. Official data from the tax department available in public domain showed that the cost of tax collection as a share of the revenue collected has been steady over the last few years although in absolute terms, it has grown even as revenue receipts too swelled.

However, a sharply decelerating economic growth has raised doubts about how sustainable enforcement action could be in protecting revenue collections.

The number of persons filing income tax returns has contracted in FY19 by nearly 2% from a year ago to 6.73 crore, after rising over 20% each in FY17 and FY18, as per the tax department data. In FY17, 5.58 crore people and in FY18, 6.87 crore people had filed tax returns.

The plateauing of tax return filings is in sync with the sharp deceleration in GDP growth rate from 8.3% in FY17, 7% in FY18 and 6.1% in FY19. Experts said that post demonetisation and GST roll out, tax evasion has reduced. “What is required now is building confidence amongst tax payers. Now dispute resolution and enhancing compliance are the best way to increase revenue collections," said Girish Vanvari, founder of advisory firm Transaction Square. (ends)

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