Used credit card for Rs 2 lakh and not filing tax? Your name is with the I-T department

If you are not filing income-tax (I-T) return yet, but showing expenses through credit card purchases and investment in stocks, you are liable to pay tax or you need to explain your origin of income to the tax sleuths. Even the expenses made in foreign tour, high-end wedding and study abroad is also on tax radar.

According to official sources, tax sleuths have obtained the list of individuals from credit-card companies, big brokerage houses, popular tour operators, wedding organisers and consultants who help in study overseas to identify potential taxpayers.

Sources said, through this, the tax department had identified roughly 1 lakh taxpayers who had a PAN card but did not file I-T returns. Letters have already been sent to 50,000 such people.

In the letter, a copy of which dna has, the department had asked individuals to furnish response in the 'compliance module' in the e filing portal in 15 days.

The letter has the details of PAN number and the transaction made through credit card and sale/purchase of equity shares.

"If you do not respond to the letter in the given timeline, it will be treated as wilful concealment. The department would be bound to raise demand notice of the undisclosed income under Section 144 of the I-T Act," an I-T official told dna.
"Penalty can be levied at 100-300% of the tax evaded, while tax is imposed at the highest rate of 30%," said the official.

A top I-T official said, "The department had created a software with new modifications, which can automatically match I-T returns filed by the taxpayer with the data available in their systems."

This list comprises those individuals who have made credit card transactions above Rs 2 lakh, equity shares delivery or transfers in recognised stock exchanges, big-bang weddings, foreign tours etc between 2012 and 2015.

Biren Gabhawala, partner, C.M Gabhawala & co told dna: "It's the first time people are getting such notices. Every alternate day, there is a tax letter/notice knocked the door. However, it is a good step to encourage non- filers, but sometimes its creates fear and uncertainty among people."

The tax department is rectifying e- filings as well.
With the last date for filing I-T returns on August 31, chartered accountants and assessees both are facing problems with online data entry. dna has learnt that the tax department is checking miniscule details of the filing.

"The reason would be last-minute rush, as all new ITR forms came in mid-July. It's difficult to furnish all the details," said a chartered accountant.

However, a salaried person who can't file his ITR for financial year 2014-15 by the given deadline, can file it by March 31, 2016, without attracting penalty for late filing.

According to the I-T department's website, of the 62.19 lakh returns filed, only 12.8 lakh taxpayers have used the e-verification route so far.

From this year, the tax department has introduced an alternative way of paperless e-filing via Electronic Verification Code (EVC). The 10-digit EVC code can be generated through your net banking account, linking your Aadhaar card, using ATMs or even by registering your email or mobile number on the income tax website. However, there seems to be a general aversion to e-verifying among taxpayers.