‘Hoping for more direct tax than expectations this fiscal; looking at crypto concerns’

In the last financial year, we collected Rs 14.09 lakh crore. The Budget expectation for this year is Rs 14.2 lakh crore as of now. We are hoping and expecting we will collect much more than that. The trends until now are encouraging us to go in that way. As a whole, if you see, apart from this inflation and a couple of things that have happened, the trend seems to be going fine in the economy in April and May. So the trends are encouraging and we hope that we will be able to collect much more taxes than the last financial year.

The Income Tax Department has talked about increasing the tax base…

When we say increasing the tax base, we mean that the people who are filing returns should be much more. Last financial year, we got a total of 7.14 crore returns, which was much higher than the number we got the year prior. When we say we expect to widen the tax base, we expect that the people whose income becomes taxable would be filing their returns, and comply with the tax laws. That is the widening of the tax base. To address that, we do outreach programmes, we take out CDs, we have Samvaad channel on YouTube where our officers explain what the provisions are, how to file returns, how do we process them, how returns are issued, what you mean by tax deductions, which we do in physical and online outreach programmes too. What we also do is share the information we have about the taxpayer with that taxpayer. When you are on portals, we have the Annual Information Statement (AIS) in which we show you what information we have about you, transactions, the taxes you’ve paid, your savings bank interest.

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If you have taxable income and if you have not disclosed those activities — sometimes it’s sheer forgetfulness, you don’t remember a transaction has happened — you can check all that and file your returns. In the recent Budget 2022, we have a provision called updated return … you file your return of income, but if you are sharing the information with you and if you find that you have omitted something which should have been included in return, you can update your return. We’re bringing in provisions which make it easier for a taxpayer to rectify mistakes or omissions in their returns. Next step we will be going on is pre-filing income tax returns. Not for everyone, because business people are slightly on a different footing than a salaried person. We are gradually going to stepwise increase to the next level so that it becomes simpler for a taxpayer to file their returns.

Increased monitoring of transactions is happening through the AIS. Are there categories/segments which are showing higher tax evasion?

In a taxman’s language, most of the time, it’s not evasion of tax by the common man. Evasion is actually a very strong word in the taxman’s language. People sometimes do not understand, sometimes they do not have the right advice, and sometimes for a salaried person who doesn’t actively go on to deal with shares and all it’s just forgetfulness. For all of those, this information sharing, provisions of revising your returns, updating your return are helpful provisions. However much you simplify, there will be some amount of complexity in it. We’ve also seen many times people not realising that even if their tax has been deducted at source, the compliance is to file a return.

The Income Tax Department on Wednesday clarified there is no change in the rate of taxation on virtual digital assets (cryptocurrency) and it will continue to be 1 per cent and not 0.1 per cent. Are any changes being planned for the tax structure for cryptocurrency?

I cannot speak on that. You will get to know when we issue our guidelines. As you know, the intention is to explain further on it but not at present.

Experts are saying that for virtual digital assets (VDAs), the wordings in the law are so vague, and it will lend itself to litigation. Are any steps being taken to tighten definitions?

We have to wait until the documentation is out. A lot of concerns have been expressed in respect of the VDA. We are looking at those concerns.

The tax department’s intent in the Budget was that filing of appeals in the tribunal and high courts will be minimised to a great extent. What are the steps the department is taking to reduce the burden of litigation?
To minimise litigation, we have come out with another new provision this year. This is a provision where we can avoid repetitive appeals. So the number of litigation is hoped to be reduced by this provision. When we talk of repetitive appeals, both parties have to agree that it is the same question that is being litigated. For example, if ‘X’ is an assessee and the department says that for this year the question is exactly the same as it was last year, X has to say yes, it is exactly the same. Only then can we avoid filing an appeal. There is no other way it can be done. Unilaterally it cannot be stated that it is a repetitive one. So we have brought in provisions. It will now be implemented, so this financial year we will get to know what the impact is.

What are the various activities that are part of the Finance Ministry’s ‘iconic week’ in Goa that are part of the Azadi Ka Amrit Mahotsav?

Particularly for this Iconic Week, we have programmes which tell us about the development of the country and the department’s contribution to that development and also what changes have been brought to the department. There will be a video film that we will be showcasing in this regard. We also have sand art in Puri, Odisha by Padma Shri artist Sudarsan Pattnaik (to be inaugurated virtually), the theme is taxes and nation-building. This showcases where taxes have reached in 75 years and how the country has progressed because taxes are used for development works. That was until 75 years so far.

Then there is also how to take this forward to 100 years (of Independence). For the first time in its history, the department is approaching young adults and teens of today — the taxpayers of tomorrow. We feel that if we inform young children and pre-teens about what is tax, when you earn income taxes become due, what do you do to pay your taxes and then what taxes do for nation building through an interesting series of games, puzzles, comics, we will inculcate these values in children. We have felicitated sportspersons, good taxpayers and some of our department’s oldest pensioners across ranks, including a 98-year-old in Hyderabad.