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The Income Tax department tempered its scrutiny of tax returns in 2018-19 after a spike in the year before, the period in which returns filed for the demonetisation year of 2016-17 were processed, data released by the finance ministry showed.
Data tweeted by the department late on Tuesday showed that it chose only 0.25% of all the returns filed in 2018-19 for scrutiny compared with 0.55% examined in 2017-18.
This happened despite a slowdown in direct tax collection growth rate and the peaking of the rise in number of returns filed. In 2018-19, less than half of the 3.7 lakh tax returns selected for scrutiny in the previous year were chosen, as per tax department figures.
The tax authority, however, has been sharpening its data mining tools and expanding access to information about transactions in the economy with a host of measures including imposing limits on cash transactions, taxes to be deducted at the time of transactions and securing information from Goods and Services Tax (GST) authorities and financial institutions about transactions in the economy.
The finance ministry tweeted that the drastic reduction in the number of cases chosen for scrutiny was a reflection of the tax authority’s evolution from an enforcement agency to one that focused on tax payer services.
The government’s idea is to lower tax rates as the tax base widens, but the economic slowdown, which has affected the growth in tax return filings, has come in the way. Return filings can decline for two reasons—death of the tax payer or income loss. After having grown at more than 20% in 2016-17 and 2017-18, total returns filed showed a close to 2% contraction in 2018-19. The department received over 6.73 crore returns in 2018-19 compared with over 6.87 crore returns in in 2017-18. #casansaar (Source - PTI, LiveMint)
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