The Income Tax Department's eye on high-value purchases to increase tax levels

Mumbai: The Central Board of Direct Taxes (CBDT) is likely to take a tough stance on consumers who spend heavily on entertainment as part of the tax hike.

In particular, the Income Tax department intends to keep a special eye on those citizens who spend huge amounts of money on foreign tourism, huge electricity bills, expensive cars, etc.

The department is considering how to widen the tax base by scrutinizing high-value purchase bills, sources said.

The department plans to increase the existing number of taxpayers in the country by ten percent to 8.60 crore. After demonetisation, the government cracked down on tax evaders who did not file returns but made large purchases. It will be made mandatory for the seller to provide information to the tax department about certain types of large value purchases, so that it can be ensured whether such buyers are complying with the tax provision.

The Income Tax Department has decided to employ a special mechanism after it was found that high value purchases made at hotels, clothing stores, car dealers etc. are not being reported.

Usually high-value purchases require paging, but there is no special mechanism to check whether they have been fulfilled.

TDS has been deducted against payments made to several individuals, but it has come to the notice of the tax department that returns are not filed in many cases to get credit on this TDS.