Lok Sabha Question No. 116 (STARRED), answered on 2018-02-09
Subject: Increasing Tax Base
Ministry: FINANCE
Asked by: VISHNU DAYAL RAM

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK SABHA STARRED QUESTION NO.*116 TO BE ANSWERED ON FRIDAY, THE 9 th  FEBRAURY, 2018 20 MAGHA, 1939 (SAKA)

## INCREASING TAX BASE

## *116.   SHRI VISHNU DAYAL RAM:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Income Tax (IT) Department has prepared a comprehensive strategy with the objective of increasing tax base and if so, the details thereof;
- (b) whether the IT Department has enforced Non-Filers Monitoring System (NMS) to identify those individuals who have made high value financial transaction but did not file income tax return;
- (c) if  so,  the  details  thereof  and  the  number  of  individuals  identified  through  the  said  system who have not filed income tax return as per their potential tax liabilities; and
- (d) the measures taken to ensure filing of the income tax return by such individuals?

## ANSWER

## FINANCE MINISTER

(SHRI ARUN JAITLEY)

(a), (b) (c) & (d): A statement is laid on the Table of the House.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (A)  TO  (D)  OF  LOK  SABHA STARRED QUESTION NUMBER *116 FOR ANSWER ON 9 TH  FEBRUARY 2018.

(a) Yes  Madam. Widening of tax base  is  a  core  function  of  the  Income  tax  Department,  for which various measures have been taken, notably:

- (i) The  Income  Tax  Department  has  implemented  the  Non-Filer  Monitoring  System (NMS) which assimilates and analyses in-house information as well as transactional data received from third-parties, including Statement of Financial transaction (SFT), Tax  Deduction  at  Source  (TDS)  and  Tax  Collection  at  Source  (TCS)  statements, Intelligence & Criminal Investigation (I&CI) data etc. to identify such persons/entities who have undertaken high value financial transactions but have not filed their returns.
- (ii) The  mechanism  for  collection  and  verification  of  financial  information  has  been broadened to include data in respect of various types of high-value transactions from banks and financial institutions and high-value  expenditure  from  commercial establishments in the form of Statement of Financial Transaction (SFT).
- (iii) The scope of TDS and TCS has been expanded by bringing more taxable transactions within their ambit.
- (iv) Quoting  of  Permanent  Account  Number  (PAN)  has  been  made  mandatory  for  all transactions  above  rupees  two  lakh  and  for  specified  transactions  in  respect  of property, shares, bonds, insurance, foreign travel, demat account, etc.
- (b) Yes Madam.

(c) The number of non-filers with potential tax liabilities identified in various NMS cycles is as under:

- (a) Cycle 1 (2013): 12.19 lakh
- (b) Cycle 2 (2014): 22.09 lakh
- (c) Cycle 3 (2015): 44.07 lakh
- (d) Cycle 4 (2015): 58.95 lakh
- (e) Cycle 5 (2016): 67.54 lakh
- (f) Cycle 6 (2017): 35.10 lakh

(d) Following measures have been taken to ensure  filing of  returns  by  the  persons  identified under NMS:

- (i) Rule based algorithms  have  been  applied  to  classify  the  cases  under  different  risk categories  for  graded  monitoring.  SMS  and  email  were  sent  to  the  target  segment asking them to access e-filing portal and submit their response.
- (ii) Compliance  Management  Cell  (CMC)  has  been  set  up  for  sending  letters  and capturing  responses  from  the  non-filers  centrally  without  interface  with  the  field officers.
- (iii) Statutory notices for filing of return are issued in appropriate cases.
- (iv) Under the Project Insight, a new Compliance Management Central Processing Centre (CMCPC) has been operationalized for leveraging campaign management approach (consisting of emails, SMS, reminders, outbound calls, letters) to support voluntary compliance.
- (v) The Income Tax Department has also set a target of adding 1.25 crore new return filers  during  F.Y.  2017-18.  Till  December,  2017,  63.86  lakh  new  ITR  filers  have already been added.

Due to constant and intensive follow-up of NMS data, more than 1.72 Crore returns have been  filed  by  the  persons  identified  in  different  NMS  Cycles  and  self-assessment  tax  of  about Rs.26,425 crore has been paid by them till December, 2017.

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