I-T dept sends queries to NRIs about big, unexplained transactions

Govt officials aware of the matter said that the I-T department was taking cues from its 'insight' database to gather information on these individuals

A large number of non-resident Indians (NRIs) have received notices from the income tax (I-T) department for reassessment, The Times of India (ToI) reports. The notices seek details about high-value transactions, including the purchase of immovable property, investments, deposits etc.

Moreover, details of their foreign currency non-resident (FCNR) account in India have also been sought, the report said.

Government officials aware of the matter told the newspaper that the I-T department was taking cues from its "insight" database to gather information on these individuals. This data includes the particulars of various financial transactions entered into by taxpayers, including non-residents.

On a related note, Business Standard had previously reported that the indirect tax administration had shortlisted 50,000 fresh cases that will be taken up for goods and services tax (GST) auditing in the current financial year as part of efforts to increase compliance and widen the tax base, Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri said in an interview at his office here.

Providing clarity on the notices, a Partner at Rashmin Sanghvi & Associates was quoted in the ToI report as saying that the information is collected by the tax department on such transactions. However, the law does not mandate the filing of tax returns in all such cases. Sanghvi added that many NRIs earn large sums of money from within India, for which they do not file returns unless it is mandated. Regardless, these transactions are flagged as 'non-filer' in the Central Board of Direct Taxes (CBDT's) Risk Management Strategy, Sanghvi told ToI.

The report added that the notices being sent to the NRIs are an outcome of the system-driven suggestion that informed the department of the income that escaped assessment.

Adding more context to the notices, Sanghvi told ToI that NRIs should come forward with evidence to conclusively establish that the source of such investments or remittances is from income on which tax has been paid or is from income exempt from taxation. In the absence of such documentary evidence, he said the I-T department reopens assessment of these transactions.