Adhia vows not to interfere, but seeks accountability from tax department

Revenue Secretary Hasmukh Adhia has asked the Central Board of Direct Taxes (CBDT) to come up with a firm revenue collection target under the one-time black money window scheme that closes on September 30, as he vowed non-interference in implementation of the Income Declaration Scheme 2016 (IDS), sources said. Adhia communicated it to the direct tax department during the video conference meeting on Saturday. He also asked the department to prepare a list of potential declarants under the scheme.

Amid protests from the Indian Revenue Service Association, the revenue secretary said he would no longer be chairing the video conference meetings. The new CBDT Chairperson Rani Singh Nair will chair the meetings from now on.  “The secretary said he would have an understanding with the new CBDT chief on how much money the department will collect for the government under the IDS. He pressed on accountability in turn for non-interference,” said a source.

Adhia used to chair weekly meetings with field officers every Saturday, something that did not go down well with a section of the direct tax department.

Now, the new CBDT chief will decide on the frequency of these meetings.

“Right from the beginning, there appeared an attitudinal change. He made it very clear that if the Board did not want him to interfere, he was to be assured of the success of IDS as he was also accountable to the higher-ups,” said another source.  IDS gives a chance to domestic tax payers to declare their undisclosed income or assets by September 30. The scheme offers immunity from higher penalty and prosecution by paying tax and other charges at 45 per cent in three instalments by September 30, 2017. These include 30 per cent tax rate, besides Krishi Kalyan cess and penalty at 7.5 per cent each.

About 25 per cent tax payment needs to be made by November 30, another 25 per cent by March 31 and the remaining 50 per cent by September 30 next year.

The Prime Minister’s Office is also monitoring the scheme on a weekly basis.

Unlike India, the tax departments in many countries have complete autonomy; they sign a memorandum of understanding with the respective governments at the beginning of the year to collect a set amount in taxes during the year. The tax departments, in turn, get incentives, sources said.

A resolution passed by the IRS Association in Mumbai quoted the reforms suggested by the Parthasarathi Shome-headed Tax Administration Reforms Commission (TARC).

“TARC should be implemented expeditiously, which says the role of Department of Revenue be restricted to dealing with matters concerning CBDT and Central Board of Excise & Customs. It has no power to exercise any supervision over the respective boards and any of its attached offices,” it said.

In a similar compliance window for people holding undisclosed assets abroad last year, the government received only Rs 2,428.4 crore in payments from disclosures worth Rs 4,147 crore made during a three-month long compliance window that ended on September 30, 2015.

“While it is difficult to say what should be the target that will be set by CBDT, it should be higher than Rs 10,000 crore in terms of disclosures,” said the source.

Adhia also asked the tax investigation wing of the Board to prepare a list of potential declarants under IDS.

These could include those against whom complaints were filed but no action was taken by the department on the ground that the information was not good enough or the cases were still being perused.

Having secured information on nine million high-value transactions that were done without PAN, the income tax department has issued 700,000 letters to such individuals, asking them to come clean on the transactions.

Although IDS is voluntary in nature, the issuance of letters during the window might instill fear among tax evaders forcing them to come clean.

The tax department has scrutinised the Annual Information Returns for high-value transactions, which have divulged cash deposits of Rs 10 lakh in a savings bank account, sale/purchase of immovable property valued at Rs 30 lakh or more, and many of these transactions do not have PAN linked to them.

Last week, Indian Revenue Service (IRS) officers’ delegation had put forward their concerns to Finance Minister Arun Jaitley over interference by the Department of Revenue. It demanded that the CBDT be given the power to administer the direct tax policies of the government.