Lok Sabha Question No. 2088 (UNSTARRED), answered on 2021-03-08
Subject: Income Tax Collection
Ministry: FINANCE
Asked by: Amol Ramsing Kolhe, Subhash Ramrao Bhamre, Supriya Sadanand Sule, DNV Senthilkumar. S., Kuldeep Rai Sharma, Sunil Dattatray Tatkare

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE LOK SABHA

## UNSTARRED QUESTION NO 2088 TO BE ANSWERED ON - 08.03.2021 PHALGUNA 17,1942 (SAKA)

## Income Tax Collection

2088.  DR. AMOL RAMSING KOLHE:

DR. SUBHASH RAMRAO BHAMRE:

SHRIMATI SUPRIYA SULE:

DR. DNV SENTHILKUMAR. S.:

SHRI KULDEEP RAI SHARMA:

SHRI SUNIL DATTATRAY TATKARE:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  income  tax  collection  has  drastically  reduced  due  to  Covid-19 pandemic and if so, the steps taken by the Government to overcome the shortfall;
- (b)  whether  the  Government  has  been  able  to  achieve  the  objective  of  settling income tax cases after launching Vivad se Vishwas scheme;
- (c) if so, the details thereof along with the total number of cases disposed of under Vivad se Vishwas scheme till date;
- (d) whether the number of people filing income tax returns in the country is declining during the last three years;
- (e) if so, whether the Government will take steps to bring the people earning above the  exemption of  income  limit  under  the  Income  Tax  Net  and  if  so,  the  details thereof; and
- (f) the other steps taken by the Government to reduce the litigation and tax disputes in direct taxes and to boost income tax collection in the country?

## ANSWER

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

- (a) Yes sir. The Direct Taxes collection has been reduced due to Covid-19. During the  Financial  Year  2019-20,  net  collection  of  Direct  Taxes  was  Rs.10,50,711 Crores.  Considering  the  impact  of  Covid-19  pandemic,  Direct  Taxes  collection target for the Financial Year 2020-21 has been reduced to Rs. 9,05,000 Crores.

As against the Revised Budget Estimates of Direct Tax Target of Rs. 9,05,000 Crores,  net  collection  of  Direct  Taxes  amounting  to  Rs.  732388.72  Crores  has been  achieved  during  the  period  from  1.4.2020  to  28.2.2021.  Any  shortfall  in collection  of  Direct  taxes  against  the  targets  can  be  calculated  only  after completion of the Financial Year.

Further, in order to achieve the Revised Budget target of Direct taxes for this Financial Year, the following measure have been taken:

- i. Data Mining and data analytics are used for identifying potential tax payers and increasing tax base.
- ii. The  scheme  of  faceless  assessment  has  been  launched  to  improve  the quality of scrutiny assessment.
- iii. Surveys and searches are conducted in potential large tax evasion cases.
- iv. For  overcoming  the  shortfall  in  tax  collection,  no  new  tax  has  been introduced  in  the  Finance  Bill,  2021  and  the  tax  collection  is  expected  to improve through better tax compliance and dispute resolution mechanism. For this purpose, a new Dispute Resolution Committee (DRC) is proposed to be constituted by the Finance Bill, 2021 which will encourage easier and faster dispute resolution.
5. (b) &  (c) Yes.  The  statistics  regarding  the  declarations  filed  under  the  Vivad  se Vishwas Scheme upto 01.03.2021 is as under:
6. (d) The  number  of  Income  Tax  Returns  submitted  by  the  taxpayers  in  the  last  3 Financial Years is as follows: -
7. (e) The Government has taken following measures to bring the people earning above the exemption of income limit under the Income tax net:-
8. (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  and  Social  Media  etc.  to  identify  such  persons/entities  who  have undertaken high value financial transactions but have not filed their returns.
9. (ii) The Income-tax Department has launched 'Project  Insight'  to  strengthen  the non-intrusive information driven approach to increasing tax compliance.
10. (iii) A revised Form 26AS incorporating high-value transactions from Statement of Financial Transactions (SFTs) has been introduced.
11. (iv) Quoting of Permanent Account Number (PAN) has been made mandatory for specified transactions in respect of property, shares, bonds, insurance, foreign travel and demat account, etc.
12. (v) In order to inter-alia widen the scope of tracking high value transactions, the Government has permitted the Aadhaar number to be used interchangeably in lieu of PAN in more than 100 forms.
13. (vi) The scope of TDS/TCS has been further expanded for widening the tax base by bringing several new transactions into the ambit of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). These transactions include large cash  withdrawal,  foreign  remittance,  purchase  of  luxury  cars,  sale  of  goods, acquisition of immovable property, etc.
14. (vii)  The  Department  has  also  signed  Memoranda  of  Understanding  (MoU)  with Ministry of Micro, Small and Medium Enterprises (MoMSME), Central Board of Indirect  Taxes  and  Customs  (CBIC)  and  SEBI  to  enable  cross  seeding  of information and inter-agency cooperation in order to identify tax loopholes and widen the tax net and prevent revenue leakages.
15. (viii)  In  addition  to the above measures the Department seeks to bring more nonfilers  into  the  tax  net  by  formulating  region-specific  strategies  by  the  field authorities for identifying potential non-filers, holding of outreach programmes to  encourage  voluntary  compliance  and  extensive  use  of  mass  media  for creating awareness, issuing statutory notices to enforce compliance, simplification in  income-tax returns and filing process to encourage voluntary filing.
16. (ix) E-mails and SMS reminders are issued to taxpayers to file their return and pay their due taxes.
17. (x) The Income-tax Department has launched publicity campaigns on TV Channels, Radio, Print  Media,  Cinema Halls and on Social Media to spread awareness among citizens regarding due dates for filing Returns, TDS Return, Payment  of  taxes  and  PAN-Aadhaar  linkage.  Brochures  have  also  been distributed  to  the  general  public  through  the  Department's Aayakar  Sewa Kendras (ASK)  all  over  India  to  spread  awareness  and  increase  voluntary compliance.
18. (xi) TDS at the rate of 0.1% on payment made for purchase of goods by a buyer (having sales/ turnover of Rs. 10 crore or more in the financial year preceding the  year  in  which  the  sale  is  made)  to  a  person  during  the  financial  year exceeding Rs. 50 lakhs.
19. (xii)  In  order  to  disincentivize  non-filing  of  Income-tax  returns,  Finance  Bill,  2021 has proposed for deduction/collection of tax at higher rate in case of a person who has not filed its income-tax return for both assessment years relevant to the  previous  year  immediately  preceding  the  financial  year  in  which  such transaction is being carried out by such person on which tax is required to be deducted/collected.
20. (f) The following steps have been taken by the Government to reduce the litigation and tax disputes in direct taxes and to boost income-tax collection in the country:-
21. (i) The  monetary  limit  of  tax  effect  in  a  case  for  filing  of  appeal  before  the various  appellate  authorities  has  been  increased  to  Rs.  50  lakh  for  the Income-tax  Appellate  Tribunal,  Rs.  1  crore  for  the  High  Court  and  Rs.  2 crore for the Apex Court.
22. (ii) Section  270AA  has  been  inserted  in  the  Act  to  provide  an  option  to  the taxpayer  to  seek  immunity  from  penalty  and  prosecution  if  he  makes  full payment of the tax and interest payable as per assessment order within the period  specified  in  the  notice  of  demand  and  does  not  file  any  appeal against such order.
23. (iii) For  transfer  pricing  cases,  section  144C  was  inserted  in  the  Act vide Finance Act, 2009 to provide an option to the taxpayer to file his objections to the draft assessment order forwarded to him by the Assessing Officer to the  DRP.  The  DRP  is  a  collegium  of  three  Principal  Commissioners  or Commissioners  of  Income-tax,  which  is  empowered  to  consider  such objections and issue suitable directions to the Assessing Officer to complete the  assessment.  DRP  can  confirm,  reduce  or  enhance  the  variations proposed  in  the  draft  order  after  providing  reasonable  opportunity  to  the taxpayer. To further reduce litigation the directions of the DRP were made binding on Revenue vide the Finance Act, 2016 and no appeal can be filed by Revenue against the directions of DRP.
24. (iv) Section 92CC was inserted vide the Finance Act, 2012 in the Act provides the taxpayers an opportunity to enter into Advance Pricing Agreement (APA) which is an agreement  between  the Board and any person, which determines, in  advance,  the  arm's  length  price  or  specifies  the  manner  of the determination of arm's length price (or both), in relation to an international transaction.
25. (v) The  provisions  for  safe  harbour  rules  were  introduced  in  the  Act vide Finance (No. 2) Act, 2009 and provide for the circumstances in which the income-tax  authorities  shall  accept  the  transfer  price  declared  by  the assessee, for International Transactions and Specified Domestic Transactions. This saves the taxpayers from uncertainty in transfer pricing determination as well as protracted litigation.
26. (vi) Vivad Se Vishwas Scheme has been notified for settling the direct taxes disputes.
27. (vii)  Faceless assessment, faceless appeal and faceless penalty schemes have been introduced to improve the quality and fairness in assessment orders, appeal  orders  and  penalty  orders  resulting  in  substantial  reduction  in litigation.
28. (viii)  With  the  objective  to  allow  small  taxpayers  to  resolve  their  disputes  with minimum cost and compliance burden, the Finance Bill, 2021 has proposed to  create  one  or  more  DRC  specifically  targeted  towards  such  taxpayers. The DRC shall have the powers to reduce or waive any penalty imposable or grant immunity from prosecution for any offence under the Act.
29. (ix) Further, it was also clarified to the field Officers that appeals should not be filed  merely  because  the  tax  effect  in  a  particular  case  exceeds  the prescribed  monetary  limits  and  the  filing  of  an  appeal  should  be  decided strictly on the merits of the case.

| Current status of declarations filed under Vivad se Vishwas Scheme (upto 22.02.2021 at 5 pm)   | Current status of declarations filed under Vivad se Vishwas Scheme (upto 22.02.2021 at 5 pm)   | Current status of declarations filed under Vivad se Vishwas Scheme (upto 22.02.2021 at 5 pm)   | Current status of declarations filed under Vivad se Vishwas Scheme (upto 22.02.2021 at 5 pm)   |
|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                                | Count of Form-1 Filed                                                                          | Disputed Tax (as per Form-1) (in Rs. Crores)                                                   | Payments against Disputed Tax (in Rs. Crores)                                                  |
| Central PSUs                                                                                   | 1393                                                                                           | 35129                                                                                          | 27720                                                                                          |
| State PSUs/Boards                                                                              | 833                                                                                            | 1619                                                                                           | 1023                                                                                           |
| Others                                                                                         | 126507                                                                                         | 61579                                                                                          | 24603                                                                                          |
| Grand Total                                                                                    | 128733                                                                                         | 98328                                                                                          | 53346                                                                                          |

| Financial Year   |   Total Number of ITRs Filed (In Crores) |
|------------------|------------------------------------------|
| 2017-18          |                                     6.87 |
| 2018-19          |                                     6.74 |
| 2019-20          |                                     6.78 |

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