Taking cognisance of the Comptroller and Auditor General’s (CAG) report on tax evasion in real estate, the Finance Ministry is in the process of introducing strict compliance rules in order to bring more real estate developers under the tax net. A CAG tabled last month had said that 95 per cent of developers are outside the income tax net and noted that the Income Tax department has no mechanism to ensure that all registered companies have PAN and are filing their Income Tax Returns (ITRs) regularly.
“The CBDT has taken note of the CAG report. The numbers are alarming. The department is planning to take a series of steps to ensure better compliance among real estate developers,” a senior official in the finance ministry said. The Central Board of Direct Taxes (CBDT) is also planning to set up a committee which will look at the necessary reforms required. “The sector is also a nesting place for parking black money. The department is planning to initiate proper listing of the companies, its board of directors and the PAN number,” the official added.
The CAG had based its report on 54,578 companies for which data was made available for the audit. “ROCs did not have information about PAN in respect of 51,670 (95 per cent) of a total of 54,578 companies for which data was made available to Audit,” the report noted.
“There is no mechanism with ITD to ensure that all the registered companies have PAN and are filing their ITRs regularly,” it went on to point out. Officials also added that the I-T department will work closely with the Ministry of Corporate affairs to update the databases with income tax filed by these companies.
The department is also looking at the rampant mistakes in assessment which had cost the exchequer. “Out of 78,647 assessments made in the period, we checked 17,155 assessment records with assessed income of Rs1,02,106 crore… We noticed 1,183 mistakes having tax effect of Rs 6,093.71 crore, thus causing loss of revenue to the Government,” the CAG report had added, also flagging weak enforcement of income tax law.
“The system to ensure compliance of filing of ITRs by the sellers of high-value immovable properties was not effective. The enforcement of provisions in respect of filing AIRs… by the ITD was weak,” the CAG had observed. Officials also hinted that some of the initial recommendations may be included in the Direct Tax Code, which is likely to come into effect by June this year.
Source: The New Indian ExpressFollow Us on Social Media