Concerned that the cut in the highest tax rate on personal income from 42.74% to 39% in the Budget FY24 hasn’t curbed tax evasion among high net worth individuals (HNIs), the income-tax department is all set to crack down on the super rich who underpay their taxes.
Individuals with reported or likely annual income above Rs 1 crore are being subjected to “360-degree profiling,” a senior tax department official told FE on condition of anonymity. The department is tracking these individuals’ investment profiles, expenses incurred and sources of income for assessment, the official added.
“In FY23, 2,61,000 taxpayers showed annual taxable income of more than Rs 1 crore in their tax returns…however this number should have been much higher given the data captured via multiple other sources,” the source said.
The official said that once the screening is complete, notices will be sent to those who have under-reported their income.
According to data on the I-T department website, 2,16,000 taxpayers reported annual income of Rs 1 crore or more, in FY21. In FY20, the number of such taxpayers were a little over 2,00,000 and in FY19, 1,91,000. But all these numbers are seen to be much less than the actual number individuals with such income.
For the last many years, the tax department has noted a growing mismatch between the data collected via annual information returns filed by designated entities about high-value purchases, and the income reported by individuals.
In the Budget for this year, the surcharge on those with annual income of Rs 5 crore and above was cut from 37% to 25%, bringing down the effective tax rate on them by a substantial 374 basis points. The super-rich surcharge applied on income tax starts from income level of Rs 50 lakh at 10%, the surcharge rises to 15% for income of Rs 1 crore and above, and to 25% at the income threshold of Rs 2 crore.
Source from: https://www.financialexpress.com/money/i-t-commences-360-degree-profiling-of-hni-tax-evaders-3284726/