Fintotal News Analysis | Why Carrot-and-Stick Cannot be Spared in Taxes
Why Carrot-and-Stick Cannot be Spared in Taxes
Ruby Jacob, 22 May 2013

The government aspires to make tax administration non-intrusive but it is a human tendency to avoid doing painful things which we very well know we are supposed to.  Many times we don't exactly intend to skip them; rather we postpone such things indefinitely, unless we are interrupted by some force to do them.

The government just released a notice with an appeal to tax payers to pay up their tax dues on time this financial year. It highlights that a special Compliance Management Cell has been set up for following up, tracking tax return filing and tax payment of some 12,19,832 PAN holders who did not file their returns.

In the last 3 months the I-T department sent notices to 1.05 lakh of these non-filers in the high-priority list. Guess what, it paid off.

Based on the department's preliminary assessment, many of these taxpayers paid their dues after they got the notice. It had offered to waive off penalty for those who volunteered to file tax returns and clear tax dues with interest. More than Rs 600 crore was collected as self assessment tax and advance tax from this segment in this period!

Well, if the notices have not motivated the rest of the taxpayers to comply, they surely have raised the zeal of the revenue department. Another set of 70,000 notices are being sent this month. 35,000 letters were already dispatched on 20 May.

Now here's a piece of information for those who are wondering how these tax payers have been selected.. Information about financial transactions of PAN card holders is available with various government agencies. Banks and Mutual Funds are required to report high value transactions in Annual information Return (AIR) to the I-T dept. TDS/TCS returns is another source of information on income. Other agencies such as FIU-IND also contribute information. I-T department has used certain algorithms to pick out high-priority cases from such persons who have not filed income tax returns.

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