Banks, SEs to file annual returns from April

In a bid to check tax evasion, the Central Board of Direct Taxes (CBDT) will make it mandatory for banks, stock exchanges (SEs) and registra...

In a bid to check tax evasion, the Central Board of Direct Taxes (CBDT) will make it mandatory for banks, stock exchanges (SEs) and registrar of properties to file annual information returns from April 1, 2004. This exercise also forms a part of the CBDT drive to move away from an invasive tax administration.

A revenue department official said, ‘‘CBDT is trying to move away from invasive, discretion-based operation to a technical and transparent environment. CBDT will soon notify the entities which will be required to file annual information returns.’’ The official said that entities which will be required to file these returns will be those dealing with high value transactions.

CBDT has already decided to prepare a data bank of high value transactions to try and deal with the growing menace of tax evasion. This exercise will cover both individual and corporate assesses. The taxman will set a structure for electronic data interchange with departments involved in transactions such as banks, stock exchanges, telephone companies and regional transport authorities.

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The department has taken a policy decision to focus on its core functions of assessment and enforcement rather than logistics and support services. The decision to outsource logistics such as data entry and delivery of PAN has been announced earlier.

The infrastructure for the data bank will in all likelihood be maintained by the National Securities Depository Ltd (NSDL) on behalf of the department. NSDL has already been entrusted to receive information regarding returns filed by general assesses under Section 206 of the Income Tax Act.

The CBDT, it may be recalled, had engaged Unit Trust of India (UTI) to issue PAN cards to tax-payees. Similarly, CBDT has initiated electronic filing of income tax-returns and has appointed various banks as intermediaries for facilitating the same. The CBDT decision to procure annual information returns from agencies dealing with high-value transactions is in line with the recommendations of the tax force on direct taxes headed by Dr Vijay Kelkar, advisor to Finance Minister Jaswant Singh. He had suggested amendments to the Income Tax Act to provide for submission of ‘Annual Information Return’ by third parties in respect of various transactions in format to be prescribed by the revenue department. The step, the committee had argued, would ensure continuous flow of essential information and at the same time eliminate the element of discretion.

The government in 2002-03 has collected Rs 44,700 crore (revised estimates) as corporation tax collection and Rs 37,300 crore as income tax.