The Budget announcement of zero tax for earnings upto ₹12 lakh per annum and the rejig of tax slabs across the board should prompt more than 90 per cent of individual taxpayers to embrace the new tax regime as compared to the about 75 per cent as of now, CBDT Chairman Ravi Agrawal said on Sunday.
In a post-Budget interview exclusively to PTI, Agrawal said the government’s and the Income-Tax Department’s philosophy and approach is to ensure a “non-intrusive” tax administration in the country through an enhanced usage of Artificial (AI) apart from the regular human intelligence gathering mechanism.
The CBDT chief said the tax processes available to a “common” taxpayer for reporting their income were not “very complex” giving examples of the simplified ITR-1, pre-filled Income Tax Returns, automatic computation of Tax Deducted at Source (TDS) etc. available to them.
He also cited the new tax regime (NTR), where there are no deductions or exemptions allowed like the old regime, which has “simple” calculations for a taxpayer, enabling them to file their ITR without the help of a professional.
The Central Board of Direct Taxes (CBDT) is the administrative body, under the Union finance ministry, for the I-T Department.
Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts for the middle class and declared that individuals earning up to ₹12 lakh per year will not have to pay any taxes, raising this exemption threshold from ₹7 lakh at present.
An additional ₹75,000 standard deduction is available for the salaried class.
She also altered tax slabs for people earning above this threshold to help save up to ₹1.1 lakh in taxes for those with income up to ₹25 lakh in a year, according to the Budget documents.
Agrawal acknowledged there always remains “a scope for improvement” going forward and it’s true across the spectrum, including where there are complex business structures. “But by and large, I would say, for a common taxpayer, the things have been simplified to a great extent.”
Moving ahead, he said, with the announcements made in the Budget vis-a-vis payment of income tax, more and more taxpayers “would be prompted” to opt for the NTR.
“If not 100 per cent of the taxpayers, at least going forward next year onwards, we should see figures in the 90s (90 per cent) or maybe more than that,” he said.
As per current data, about 74-75 per cent of individual taxpayers have moved to the NTR that was brought in by the government a few years back.
Agrawal emphasised that the Budget provisions, related to income tax payment, benefits not just those who earn ₹12 lakh per annum but “all across”.
The thought behind these decisions, he said, was basically the interest and “substantial relief” for the middle class.
“All these things create a very positive sentiment in the economy and that itself propels growth. So, basically once that growth happens, the people consume, and expenditure happens and then the economy grows, and when the economy grows, it again comes back in some form through taxes.”
“So, basically, it is an integrated sort of exercise,” he said.
Asked how the department would pursue one of its main duties of “widening and deepening” the tax base, the CBDT chief said they were harnessing technology in a big way including the usage of AI, human intelligence and tapping of various data electronically.
“We are getting information from different data sources, we are collating that data and making it available for the taxpayer,” he said.
Now, Agrawal added, more and more taxpayers are “getting aware” about the variety of transactions undertaken by them and, therefore, they comply when they file their returns. “That compliance is a way of widening the taxbase,” he said.
Similarly, when it comes to deepening the taxbase, the I-T department does “data analytics” and informs the taxpayer that “please consider this information that we have”.
“So, then, if the person complies, that is deepening the tax base, and what we see is that the results have been encouraging (through these methods),” he said.
About 90,000 taxpayers who had claimed “wrong or bogus” deductions have filed revised returns and paid ₹1,000 crore in taxes during the last year, the CBDT boss informed.
Also, he said, about 90 lakh people filed ITR-U or updated ITR paying about ₹8,500 crore of tax to the government.
“Why is all this happening? Basically, data is being made available, taxpayers see that and, then on their own accord, file a return (ITR). This is actually the new approach that we got to take. There is no need for scrutiny as such to be done,” he said.
As per Agarwal, the philosophy that the taxman is now following is that they just “prompt” a taxpayer that “this is one area that they would like to see and pay the taxes and finish it off and be happy about it.”
“That itself triggers compliance, widens and deepens the taxbase,” he added.
Asked about the cases where individuals and other category of taxpayers have claimed “bogus” deductions in their ITRs, the CBDT chief said they were “connecting” with the organisations in the government and private sector and asking their designated deductors to advise their respective employees to “correct” any mistakes that they have done while filing ITRs by using the facility of filing “updated” returns.
“People are generally responding to this approach.”
“Wherever we have found that there is a certain segment or a group who has been ill-advising taxpayers (to claim bogus deductions or exemptions) there we have taken some action…,” Agrawal said, indicating conduct of search and survey operations against those engaging in tax evasion or avoidance.
