Demonetisation, GST impact: Tax base widens, I-T returns filing up 25%

The total number of returns filed as on August 5 stands at over 2.823 crore

The number of I-T returns filed for 2016-17 year grew by 25 per cent to 2.83 crore, the tax department said. This sharp rise in the income tax return filing by individuals could be attributed to demonetisation of high currency notes and the implementation of goods and services tax (GST) besides other black money deterrent measures announced by the government.

The returns filed up to August 5, the extended deadline, were up 25% at 28.3 million compared to 22.7 million during the corresponding period 2016-2017. The growth in the same period last year was 9.9 per cent.

“The efforts to recover black money from the system post demonetisation and the department opting for non-intrusive measure has led to the improvement in the returns filing. Operation clean money has prompted more people to declare their income,” said a senior revenue department official.

The income tax department has identified around 30,000 people for scrutiny who revised their income for the previous years by either showing a significant jump in ‘cash in hand’, or filed a return for the first time since demonetisation.

“The numbers show that a substantial number of new tax payers have been brought into the tax net subsequent to demonetisation, ” said the official.

Neeru Ahuja of Deloitte said that the twin initiatives of the government - demonetisation and GST- have compelled the non-tax filers to realised that they need to be tax compliant going forward and be on the right side of the law.

Post demonetization, the tax department conducted searches on 900 groups of people up to March this year, resulting in the seizure of Rs 900 crores and admission of undisclosed income of Rs 7,961 crores. Besides, 8,239 surveys were conducted leading to detection of undisclosed income of Rs 6,745 crores.

In the current fiscal, the tax department has seized assets worth Rs 103 crore after conducting searches on 102 groups that admitted to undisclosed income of Rs 2,670 crore. The department has also conducted surveys in 202 cases leading to a detection of Rs 150 crore black money.

GST was implemented from July 1, which subsumed 17 indirect levies of states and the Centre including service tax, value added tax, excise duty, octroy, among others. It will form an input tax credit chain, which will make it difficult to evade taxes.

Advance tax collections of personal income tax showed a growth of about 41.79 per cent as on August 5 over the corresponding period in FY 2016-2017. Personal income tax under self-assessment tax (SAT) grew at 34.25 per cent over the corresponding period in FY 2016-2017.

The income tax department has a steep collection target of Rs 9.8 lakh crore, a growth of 15.7% compared with a growth of Rs 14.3% in the previous fiscal. Income tax rate on income between Rs 2.5 lakh and Rs 5 lakh has been cut to 5 per cent from 10 per cent from the current year.

The strategy for the fiscal includes litigation management, disposal of high-value cases, scaling up of searches and seizures, strengthening of systems and investigation teams and tying up with global data mining companies for information gathering.

The government had come out with two income declarations schemes last year, providing an opportunity to black money holders to come clean. They could disclose unaccounted income and pay a tax amount and penalty. The Income Declaration Scheme fetched the government close to Rs 12,000 crore last fiscal and another Rs 10,000 crore from that is expected this year due to the staggered payment option.