CBDT action plan for FY25: I-T Dept asked to widen tax base by 10%, recover 60% of arrears | Key details

The Central Board of Direct Taxes (CBDT) has released the central action plan (CAP) for financial year 2024-25, asking the Income Tax Department to widen the number of tax filers by around 10% during the fiscal year ending March 31, 2025, news agencies reported.

The CAP, which is yet to be released in public domain, reportedly sets a target before the taxation body to recover 60% of the total pending tax arrears.

FY25 target

The Board said the tax department has been given a target to add in the current fiscal 10% more tax return filers to what the filer base was at the end of 2023-24.

The CBDT also informed the I-T authorities that "new opportunities for identification of potential taxpayers have opened up due to data mining and data analytics" and effective use of such data may result in "identification of a large number of potential taxpayers."

"The case of non-filers and those whose ITRs (income tax returns) do not match with financial transactions done by them are selected based on rules through management information system and taken up for e-Verification. The outcome of e- Verification results in widening and deepening of taxpayer base," news agency PTI quoted it as saying.

Recovery of tax arrears

The Board declared in the action plan that a "special team" headed by a Principal Commissioner of I-T be formed in each region by September end to act and recover tax arrears from the top 5,000 cases -- about 60% of the total demand of over ₹43 lakh crore, the report said.

The CBDT also expressed concern over the figures of arrear demand "increasing" over the past years, saying it has gone up from ₹24,51,099 crore, as on April 1, 2023, to ₹43,00,232 crore on April 1, 2024, it added.

"This is a very steep rise which requires immediate and urgent action," the Board reportedly said in the CAP.

"Keeping in view the past trends of the arrear demand and cash collections, it is imperative that concerted efforts continue to be made to reverse the trend of increasing arrear demand and to initiate the process of reducing the figure to more manageable levels," it added.

The special teams will locate physical records and other details of the top 5,000 cases with a "deeper and quick analysis," CBDT further noted.

₹2 lakh-plus cash transactions under radar?

Senior officials told PTI that transactions over ₹2 lakh in cash were required to be reported through a statement of financial transaction (SFT) by financial institutions but that was not happening.

"While examining such reports, it is noticed that the circumvention of these provisions is widely prevalent," the Board told the I-T department.

"Further, although section 139A requires PAN (permanent account number) to be provided or obtained in specified transactions, there is no reporting/verification mechanism for determining the compliance with this obligation," it said.

In any case, it said, "high value" consumption expenditure needs to be verified with information about the taxpayer and therefore, it is imperative to identify the sources which could be involved in possible circumvention.

The department identified some of the businesses, such as hotels, banquet halls, luxury brand retailers, IVF clinics, hospitals, designer clothing stores, and NRI quota medical college seats, where the non-adherence to these rules and large cash transactions was being found.

"Such sources will have to be identified and a verification exercise could be conducted by calling for information in a non-intrusive manner," the CBDT reportedly directed the tax department.