I-T dept cautions against tax evasion by salaried class
NEW DELHI: The income tax (I-T) department has cautioned salaried taxpayers against under-reporting their income or inflating their deductions in assessment year 2018-19.
It has also warned intermediaries like chartered accountants against abetting such tax evasion. Any infractions will invite action under various penal and prosecution provisions of the Income Tax Act.
The advisory, issued by the central processing centre based in Bengaluru, comes days after the tax department notified tax return forms for 2018-19, seeking for the first time a break-up of the salary component and the deductions, together with income earned from house property.
Armed with these details, the department will be able to step up scrutiny to check tax evasion by the salaried class.
Taxpayers will have to give details about allowances that are not exempt, value of perquisites, profit in lieu of salary and deductions claimed under Section 16.
At present, most of the calculations used to arrive at the taxable income are part of the Form-16 issued by the employer but were not required to be disclosed in the income tax return forms.
The advisory warns taxpayers not to follow the advice of “unscrupulous intermediaries” and said the department’s risk management systems will detect the infractions.
Wrong claims will be treated as tax evasion and even intermediaries will be prosecuted, the advisory warned.
To be sure, salaried taxpayers are an important source of revenue for the tax department.
As per an analysis done by the tax department, the average tax payment made by an individual salaried taxpayer was ₹76,306 in assessment year 2016-17, as against only ₹25,753 by an individual business taxpayer.
“The tax department must have come across instances wherein salaried taxpayers understate their income, prompting scrutiny of the entire salaried class,” said B M Singh, former chairman of the central board of direct taxes.