Upset by poor advance tax receipts, the cash-strapped government on Monday warned individual and corporate tax payers of strict action for allegedly understating “true income” and urged them to pay due taxes by December 15.
Not disguising the government’s annoyance with the fact that only 14.6 lakh tax payers including individuals and companies have reported annual income above R10 lakh in assessment year 2012-13, revenue secretary Sumit Bose said: “Any fair-minded person will agree that this is a gross under-statement.”
This low figure is despite the fact that about 4.6 lakh companies, 5 lakh non-corporate bodies such as partnerships and 68.6 lakh others including salaried individuals, Hindu Undivided Families and professionals had filed returns last fiscal. Assessees are supposed to pay annual tax liability by way of advance tax by specified dates. Individuals have to pay in three installments and companies in four. The third installment for corporates and the second for all others are due on December 15. Salaried employees usually do not pay advance tax as tax is deducted at source and they usually do not have other sources of income.
Bose said the government would urge all assessees to disclose their true income. “There is no advantage in suppressing the true income or avoiding paying income tax that is due because, sooner than later, the information available with the Income Tax Department will lead the department to the doors of such persons,” the revenue secretary stated. He said there is an opportunity to rectify the mistake for those who have not yet paid the correct advance tax by making payments by December 15. He said the government seeks the co-operation of all citizens.
The strongly-worded message is based on some data mining on the number of people who made large credit card payments, made fixed deposits or purchased homes, bonds and mutual funds.
The ministry was counting on a 14% jump in direct tax collection this year to Rs 5.6 lakh crore but last month, minister of state for finance SS Palanimanickam did not mention this target while replying to a question in Parliament. He said it was expected that direct receipts this fiscal would exceed last fiscal’s collection. In fact, direct tax receipts had marginally fallen short of the targeted Rs 5 lakh crore last fiscal as well.
While data highlight a less rosy picture of tax receipts in the first half, finance minister P Chidambaram believes things would improve in the coming months. Gross direct tax receipts grew by a modest 6.5% in the April-October period to Rs 3.02 lakh crore as interest rates and uncertain economic climate affected corporate income tax receipts. However, less refund of taxes during the period compared to the same time a year ago, helped the net direct tax collection to grow 14.63% to Rs.2.50 lakh crore. Officials said on Friday that net direct tax receipts grew 15% to Rs 2.7 lakh crore in the April-November period.
Tax collection figures falling below estimate is not surprising, considering the sluggish 5.3% economic growth in the second quarter and the 0.1% growth in industrial output in the April-September period, making the corporate sector conservative in estimating their profits at the end of the year.