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India Streamlines Tax Return Vetting

by Mary Swire,, Hong Kong

23 March 2011

The Indian Tax Office has reported that despite scrutiny of income tax returns being an important mechanism for ensuring taxpayer compliance, it has evoked some concern from small taxpayers and senior citizens about prolonged enquiries taking place. Concerns have also been raised about the same cases put under scrutiny year after year.

Appreciating the concern of taxpayers and with a view to mitigating their hardships, the Central Board of Direct Taxes has, therefore, reviewed its scrutiny selection procedure. The Board has decided that during the financial year 2011-12, senior citizens' and small taxpayers' income-tax returns will be subjected to scrutiny only where the Income Tax department is in possession of credible information that suggests that the taxpayer’s paperwork should be examined further.

Senior citizens for this purpose will be individual taxpayers aged over 60. Small taxpayers will be individual and HUF taxpayers whose gross total income before deductions does not exceed INR1m (USD16,000). Finance Minister Pranab Mukherjee had already announced in the budget that salaried taxpayers would not be required to file a return of income if their employer had deducted appropriate tax and they did not have any other income.

At present, the department carries out scrutiny of up to 2% of the total number of tax returns.

TAGS: individuals | compliance | tax | India | law | retirement | budget

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