Lok Sabha Question No. 1231 (UNSTARRED), answered on 2020-09-19
Subject: Tax Evasion
Ministry: FINANCE
Asked by: Jyotirmay Singh Mahato

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 1231

## TO BE ANSWERED ON SATURDAY THE 19 th  SEPTEMBER 2020 28, BHADRAPADA 1942 (SAKA)

## TAX EVASION

## 1231. SHRI JYOTIRMAY SINGH MAHATO:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is a fact that only one per cent of population in India is direct tax payer;
- (b) if so, the details thereof;
- (c) whether it is also a fact that tax evasion is still at large level in the country; and
- (d) if  so,  the  details  thereof  along  with  the  steps  being  taken  by  the  Government  to prevent tax evasion?

## ANSWER THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a)&(b) Yes, approximately, for Financial Year 2018-19 till Feb.2020, 5.78 Crore Returns of Income  were  filed  by  individual  taxpayers  out  of  which  1.46  Crore  individual taxpayers filed Returns declaring income above Rs. 5 Lakh.  The Finance Act, 2019 provides that individual taxpayers having income upto Rs. 5 Lakh are not required to pay any income tax from Assessment Year 2020-21 onwards.

- (c)&(d) The Government has taken several steps for timely detection of tax evasion . Such action  under  direct  tax  laws  includes  searches  and  seizures,  surveys,  enquiries, assessment  of  income,  levy  of  taxes,  penalties,  etc.  and  filing  of  prosecution complaints  in  criminal  courts,  wherever  applicable.  The  Government  has  initiated various measures to prevent tax evasion which includes:
- (i) Enactment  of  'The  Black  Money  (Undisclosed  Foreign  Income  and  Assets)  and Imposition  of  Tax  Act,  2015  which  has  come  into  force  w.e.f.  01.07.2015  to specifically and more effectively deal with the issue of black money stashed away abroad.
- (ii) With the increase in electronic form of information being available, the Income Tax Department has developed a wide range of non-intrusive methods for detecting tax evasion. They include important measures like Computer Assisted Scrutiny Selection (CASS) for selection of cases for Scrutiny; Non-filers Monitoring System (NMS) to prioritize action on non-filers; Income Tax Business Application (ITBA) to help in curbing tax evasion through putting in place end to end processes for all verticals of the Department etc.
- (iii) The Income Tax Department collects information on Specified Financial Transactions (SFT), above notified thresholds, relating to cash deposits, credit card payments, purchase and sale of properties, purchase of shares and mutual funds etc. Such information is collected, collated and analyzed for computer aided scrutiny and risk profiling of taxpayers, identification of non-filers and stop filers etc.
- (iv) The  Government  has  brought  in  a  large  number  of  legislative  provisions  in  the Income  Tax  Act,  1961(the  Act)  to  effectively  tackle  tax  evasion.  They  include mandatory  quoting  of  PAN  for  various  cash  transactions,  restrictions  on  cash transaction  of  Rs.  2  lakh  or  more,  levy  of  TDS  @  2%  on  the  amount  of  cash withdrawal  by  a  person  exceeding  Rs.  1  crore  in  aggregate  from  one  or  more accounts  maintained  by  the  recipient  with  a  banking  company  or  a  co-operative society  engaged  in  the  business  of  banking  or  post  office  during  a  financial  year, prohibiting taxpayers from taking/accepting loans or deposits or a sum of more than Rs.20,000/-  in  cash  or  repayment  of  loans  or  deposits  of  a  sum  of  more  than  Rs. 20,000/in cash. No  deductions under section 80G  of the Act is allowed if cash donations exceed Rs. 2000/-.

- (v) To  bring  transparency  in  the  source  of funding  to political parties, suitable amendments  have  been  made  with  effect  from  01.04.2018  to  provide  that  no donations of Rs.2000/- or more shall be received otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bonds.
- (vi) Introduction of measures to incentivize digital transactions by allowing for transactions  through  other  prescribed  electronic  modes  apart  from  account  payee cheque or account payee bank draft such as payment by credit cards, debit cards, net banking, UPI, RTGS, NEFT, IMPS and BHIM Aadhaar pay.
- (vii) Proactively engaging with foreign governments with a view to facilitate and enhance the exchange of information under  Double Taxation  Avoidance  Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions.
- (viii) Effective enforcement actions including expeditious investigation in foreign assets cases. Such actions include searches, surveys, enquiries, assessment of income, levy of  taxes,  penalties,  etc.  and  filing  of  prosecution  complaints  in  criminal  courts, wherever applicable.
- (ix) Mandatory linking of Aadhaar with PAN, to aid in de-duplication of PAN but also prevent potential tax frauds and money-laundering.

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