IT Dept Targets Top 5,000 Arrear Cases; Hospital Bills, Weddings, Medical Fees On Watchlist

The Central Board of Direct Taxes (CBDT has unveiled the Central Action Plan (CAP) for the fiscal year 2024-25, outlining a strategic roadmap for the Income Tax Department. This plan is part of India's preparations as it nears its centenary of independence in 2047.

To address high-priority tax demand cases, the CBDT has identified the top 5,000 tax arrear cases, which account for about 60% of the total outstanding tax demand exceeding Rs 43 lakh crore. Special teams led by Principal Commissioners of Income Tax will be formed in each Principal Chief Commissioner of Income Tax zone to analyze these cases.

Focus on High-Risk Sectors

The CAP emphasizes expanding the taxpayer base and promoting voluntary compliance. It targets high-risk sectors such as hotels, luxury retailers, and medical facilities that often bypass reporting requirements for cash transactions over Rs 2 lakh. A verification process will be implemented to scrutinize high-value consumption expenditures and ensure accurate reporting.

Stringent compliance with Section 139A of the Income Tax Act is also highlighted. This section mandates the use of PAN for specified transactions. However, a lack of enforcement mechanisms has led to widespread non-compliance. To address this, the CAP directs the Directorate of Systems and the Directorate of Intelligence and Criminal Investigation (I&CI) to identify authorities not validating PANs during transactions. The deadline for identifying such authorities is set for September 30, 2024, aiming for 100% PAN validation by March 31, 2025.

Timely Completion and New Filers

The action plan mandates that all scrutiny assessments be finalized at least one month before their limitation date. For the current assessment cycle ending on March 31, 2025, the CBDT aims to complete 70% of cases by December 31, 2024, and achieve full completion by February 28, 2025.

The CAP also sets an ambitious target for increasing new tax filers by 10% compared to the filer base at the end of FY 2023-24. Although this target is slightly lower than last year's increase of 11.9%, it underscores the government's commitment to broadening the taxpayer base and improving tax compliance.

Enhancing Faceless Assessments

The CAP focuses on enhancing faceless assessments and streamlining jurisdictional and central charges to improve tax administration and taxpayer experiences. It includes measures for budget target allocation, reduction of arrear demand, litigation management, service delivery standards, and grievance redressal.

Additionally, verifying high-risk remittance data is emphasized to curb tax evasion and ensure compliance. The CAP's comprehensive approach aims to strengthen India's tax system as it prepares for its centenary celebrations in 2047.