Life is all set to change for taxpayers whose spending patterns do not match their income declarations. In an attempt to curb tax evasions, the Income Tax department rolled out its 'Project insight,' a tax tracker that will help them scan the social media profiles of the taxpayers to see if there is any mismatch between their income and expenses.
The tax department doesn't stop with that! the taxman is now bracing to maximise collections by the end of current financial year to fill the gaps of thousands of crores.
It is said that combined direct and indirect taxes may fall short by about Rs 60,000 crores this year. To minimise the loss, the I-T department is evoking a special provision in the law which allows it to directly deduct dues from the banks and debtors of the tax evader. So far, this provision was used on wilful tax evaders on rare occasions, Economic Times reported, citing sources.
Under this provision, the tax officials can do two things to the bank accounts of the tax evaders. Either they can freeze the account or they can deduct money from their account. Alternatively, they can also directly collect money from the debtors of the taxpayers.
In the last one month, the banks and debtors have received numerous letters from the I-T department, according to the Economic Times. In most of the cases, the banks will have to deduct the due amount from the said tax payer's account and transfer it directly to the Income-tax department's bank account.
In the case of debtors, they have been ordered to deposit the money in the taxman's bank account rather than paying dues to the companies/taxpayers
This would be the second attempt by the tax officials to propel income tax collections. Several companies allege that the income tax department had started issuing prosecution notices to taxpayers. Prosecution notice, means, a taxpayer can be arrested for not paying his dues. However, the Central Board of Direct Taxes (CBDT) said they did not harass any defaulters.