Indian state has seen the demonetization drive make a phenomenally positive impact on the widening of tax base and direct tax collections over the last few years.
Financial year 2017-18 saw 6.87 crore income tax returns filed which was a whopping 25% growth vis-à-vis FY 2016-17 which saw 5.48 crores income tax returns filed. The net direct tax collections for 2017-18 amounted to Rs. 10.03 lakh crores, which is 18% higher than the 2016-17 collections.
Come March this year, the income tax department went into an aggressive collections drive in order to fulfill targets for the financial year. The department has notched up its collection game by a few notches this year.
MNC’s across the country were served tax demands, recovery notices, transfer-pricing orders, followed up by notices, calls and follow-ups from the IT department. Despite adoption of these aggressive measures, the Central Board of Direct Taxes (CBDT) is expecting a shortfall of direct tax collection of ₹60,000-80,000 crore.
The Central Board of Direct Taxes (CBDT) has directed the Income-Tax Department to initiate penalty proceedings by June 30 against non-filers and ‘drop filers’ of tax returns. As per the non-filer monitoring system (NMS) of the I-T department, data for 20.4 million non-filers has been obtained between 2013 and 2017, out of which 2.5 million are those who are inconsistent — popularly known as ‘dropped filers’.
The IT department is issuing notices in all the non-filer/dropped filer cases across the country, and will be initiating proceedings accordingly in the relevant cases. The penalty for non-filing is pursued under Section 271F of the Income Tax Act, and that for late filing under Section 234. If an assesses, with an annual income of more than 5 lakhs, files returns after the due date of August 31 but before December 31, it will attract a penalty of Rs 5,000. For those who file returns after December 31, the penalty rises to Rs 10,000. However, there is an exemption for small taxpayers — if the total income does not exceed Rs 5 lakh per annum, the maximum penalty will be Rs 1,000.
If the existing NMS database is acted upon, coupled with optimum tax administration, and if legislative impetus — such as periodical review of provisions related to exemption, deductions, tax incentives, tax collection from the third parties, and taxing new areas such as digital economy — is provided, there will be a considerable increase in the tax base for the entire country as a whole.
And you can do your bit by filing your Income Tax Returns transparently and timely.
KP team shares a few benefits that individuals and companies can enjoy in the event of filing ITR on time-
1) Quicker Loan Approvals-
Filing the ITR will help individuals when they apply for a vehicle loan (2-wheeler or 4-wheeler), House Loan etc.
2) Claim Tax Refund-
Filing your Income Tax Return on time will help you receive a tax refund refund as early as possible from the Income Tax Department.
3) Income & Address Proof –
Your Income Tax Return can be used as a proof of your Income and Address which is mandatory while applying for a loan or visa.
4) Quick Visa Processing-
If you are planning to travel abroad, you had better cough up your ITR on time year after after as most embassies & consulates require you to furnish copies of your tax returns for the past couple of years at the time of the visa application.
5) Avoid Penalty and Prosecution-
In the event that individuals or companies do not file their ITR on time, the income tax officer can initiate proceedings for prosecution for a term starting from 3 months to 2 years and too with fine. If the tax you owe exceeds Rs. 25 lakh, the period may extend to 7 years.
Definitely not worth the trouble, isn’t it?
Learn how to file your Income Tax Return with our next Article “Step by Step guide to file your Income Tax Return”.
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