I-T returns filed in April-Nov up 50% y-o-y owing to demonetisation: CBDT

48% of annual target for direct taxes already collected, says CBDT chairman

The number of income-tax (I-T) returns filed in April-November rose 50 per cent in 2018-19 over the previous year owing to demonetisation, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said on Tuesday. 

The number stood at 60.8 million. In the same period, the government collected 48 per cent of its annual target for direct taxes, which is in line with the broad trend of previous years. 

In absolute terms, direct tax collection (net) could be close to Rs 5.5 trillion, which is 14.5 per cent higher than last year.

“Strong growth in direct tax collection shows demonetisation has been successful in widening and deepening the tax base, resulting in increased revenue,” Chandra added. 

Widening refers to increase in the number of taxpayers, while deepening refers to the increase in the amount declared by them, he said.

Apart from demonetisation, the stricter guidelines to file returns by due date, including an early deadline and penalty if it is crossed, helped rapid return filing, he said. 

“Due to this we are hopeful of achieving the budget target,” he said on the sidelines of an event organised by the Confederation of Indian Industry (CII) on international taxation. 

Direct taxes are crucial for the government to maintain the fiscal deficit within 3.3 per cent of gross domestic product (GDP) in 2018-19, when monthly goods and services tax (GST) collection is falling short. 

Sources in the finance ministry maintain the direct tax target could exceed by more than Rs 150 billion if the seasonal bump in collection in March stays. 

Despite a 50 per cent rise in returns filed, collections are broadly in line with the trend. Direct tax collections in the April-November period have been 48-49 per cent in the last two financial years, according to the CBDT data. In 2016-17, the year of demonetisation, April-November collection was 48.7 per cent of the annual target. 

While the number of I-T refunds processed has increased 15 per cent this year, the amount refunded has increased 21 per cent in the April-November period of 2018-19, compared to the same period of 2017-18. 

Meanwhile, issues relating to international taxation, including transfer pricing, taxes in the digital economy, and mutual agreement procedure were discussed at the event.

The CBDT is committed to bringing about simplification and certainty in taxation laws, along with reducing litigation to improve ease of doing business in India, Chandra said. 

As many as 245 Advance Pricing Agreements have been concluded, providing tax certainty to companies for nine months in transfer pricing cases, and more than 500 tax matters have been resolved under the mutual agreement procedure (MAP), he said.

The government has signed treaties with 70 countries on automatic information exchange on financial transactions, which would nudge assessees to provide information on their foreign assets and bank accounts upfront. 

Changing slabs not the core responsibility of task force: CBDT convener

Akhilesh Ranjan, convener, direct tax panel and Member (Legislation), CBDT, said the panel intends to simplify the Income Tax Act, 1961, and remove ambiguities in it, but does not primarily intend to change tax rates or income slabs. “That is not the main area of the task force,” he said. 

The direct tax panel was recast last month when the report of the previous panel headed by Arbind Modi could not submit the report to the finance minister.