Tax Authorities Intensify Monitoring of Cash Transactions in Key Sectors
The Central Board of Direct Taxes (CBDT) is ramping up its surveillance on cash transactions in a variety of sectors, aiming to tackle widespread tax evasion practices. Recent reports from the CBDT’s Central Action Plan (CAP) for 2024-25 have shed light on the board’s efforts to enforce mandatory reporting norms for cash dealings exceeding Rs 2 lakh.
Various sectors, including luxury hotels, IVF clinics, and high-end retailers, have come under scrutiny due to a pattern of cash transactions that bypass reporting regulations. The CBDT has stressed the importance of verifying high-value consumption expenditures and cross-referencing them with taxpayers’ financial information to combat these evasive practices.
The Income Tax Department has been directed to identify sources of non-compliant cash transactions and initiate a non-intrusive verification process to gather essential data. The board’s emphasis on this issue is underscored by the 1,100 searches conducted by the tax department in the fiscal year 2023-24, resulting in asset seizures worth approximately Rs 2,500 crore, with Rs 1,700 crore in cash.
Furthermore, the CBDT has drawn attention to the role of data mining and analytics in identifying potential taxpayers. The department has been urged to utilize these tools to expand the taxpayer base and increase the number of tax return filers by 10% in the current fiscal year.
Addressing concerns about the substantial increase in arrear demands, which surged from Rs 24.5 lakh crore in April 2023 to Rs 43 lakh crore in April 2024, the CBDT has mandated the formation of special teams in each region. Led by Principal Commissioners of Income Tax, these teams will concentrate on recovering tax arrears from the top 5,000 cases, which account for a significant portion of the outstanding demand.
The intensification of efforts by the CBDT and the Income Tax Department reflects a determined approach to combat tax evasion, uphold reporting regulations, and enhance tax compliance across various business sectors.