Tax Defaulters: The government has proposed an additional in the list of high-value transactions. It would be used by the tax department to identify tax defaulters. These are the people who avoid filing income tax returns or underreport their income while filing the returns. According to India’s government, bodies buying luxury items or spending sizeable amounts in the hotel are potential taxpayers. These people should file their income tax returns.
These transactions include the purchase of white goods paintings and jewelry worth over 1 lakh INR. It will also pay educational fees above 1 lakh INR, a mortgage to hotels above 20k INR, life insurance premium above 50k INR, and consumption of electricity above 1 lakh per annum. These transactions will be part of specified financial transactions that will appear in the 26A form for taxpayers (1).
IT Department to Get Reports from Third Parties on Tax Defaulters
As per sources, the IT department may have a broader SFT report by third parties about people undertaking high value but do not pay income tax. For instance, a person who is no filing income tax returns with a claim that his income is not taxable but pays school fees of say 6 lakh per annum. That person is trying to circumvent the income tax system. Likewise, people purchasing luxury goods or spending a sizeable amount on hotel bills are potential taxpayers. These persons should file their income tax returns.
An official stated that the third-party reporting of high-value transactions made by a person not filing any income tax would allow the department to take action. The department will be able to nudge such persons to file their income tax return and pay their due fee. In early 2020, the government made it mandatory for people to file their income tax returns. It includes people who are paying an electricity bill of over 1 lakh per annum and has an expense of over 2 lakh in foreign travel.