Tribals misusing IT law?

New Delhi [India] Dec 29 (ANI): Tribals in North east India might be misusing the Income Tax (IT) Act because of ignorance or misconception, according to a senior Income Tax official who spoke about plans to reach out to such people.

The official, on the condition of anonymity, told ANI that an investigation carried out by the IT department found that during the demonetisation period, huge amount of cash was deposited in the accounts of tribals, which was siphoned-off.

An inquiry found that Section 10(26) of the Income Tax was being misused in the North Eastern states by the tribals, the official said.

The Section gives them exemption on tax from any income source in the areas of North East Region or by way of dividend or interest on securities.

According to the official, people belonging to the tribal community were found owning property in Guwahati, Agartala, Imphal, Delhi etc and receiving rent but did not file their tax returns.

The official stated that several people from the community had fixed deposits in banks in Guwahati and Delhi, on which they had been earning interest but were not filing returns.

It was also learnt that no tax was deducted on a salary of even non-tribal person posted in tribal areas, he said, adding hotel chains, owned by partnership firms, neither were filing returns nor paying taxes.

The law is being misused because there is a wrong perception among the tribals that they are exempted from income tax, the official said.

The tribals are not even exempted from penal consequences of repayment of cash loans taken of over Rs 20,000, he added.

The official clarified that the penal consequences on cash payment of more than Rs 2 lakh for any purpose of investment, including land or vehicle, are also not exempted.

Cash payments of more than Rs 10,000 are also not exempted.

The Income Tax department is now reaching out to the tribals to sensitise them about Benami and Blackmoney Act besides appraising them about tax liabilities.

As per another official, looking after the issues of the North-East region, the IT department is going slow on tribals as they need to be aware of the Income Tax laws and their liabilities.

The department's intent is to change the perception of tribals, the official added.