In an attempt to achieve the projected growth rate of 12.7% for FY21, the Income Tax department of India is devising ways and means to make the tax collection system more efficient and to increase the number of taxpayers. Recently, the Chairman of the Central Board of Direct Taxes, Mr. P.C. Mody has said that now the department will be closely monitoring high-value transactions made by the taxpayers. This step will also curb the tax evaders and help CBDT in achieving its goal of higher tax collection.
Increased use of technologies like data analysis and artificial intelligence are being made to detect high-value transactions. Technology will also help to correlate these high-value transactions with the tax filled by the corresponding individual who made the high-value transactions. CBDT intends to correlate the spending and investments made by people with their known source of income, which will help in nabbing tax evaders.
CBDT is taking all possible measures to increase the tax collection. The department is said to have increased the reporting entities, which are third-party financial institutions, for reporting financial transactions. Mr. Mody said that on completion of the database and correlation of data, the department will be able to track the transactions made by individuals and the tax they have filed on a real-time basis. Though the system sounds to be akin to surveillance, Mr. Mody rejects the idea and names it as “subtle persuasion”. He says it is a subtle way of telling taxpayers that the authorities are aware of the high-value transactions made by them.