High networth individuals, or HNIs, may soon be subject to intense year-round scrutiny by income-tax officials. A panel constituted by the Central Board of Direct Taxes, or CBDT, has proposed setting up a dedicated cell to monitor those earning over 1 crore per annum or spending more than Rs.10 crore a year, or having assets in excess of Rs.100 crore. The panel has also suggested that the Income-Tax Department share information on these individuals with its overseas units to keep a close tab on their spending abroad. Robust and dedicated data centres have been recommended for creation of 360-degree profiles of such HNIs to ensure proper monitoring and payment of taxes, said an income-tax official privy to the report. Such dedicated monitoring of HNIs would enable the tax department to map expenditure to income. The panel believes this would help in tracing black money in cases where spending exceeds known sources of income. Countries such the US, UK and Australia already have such dedicated tax divisions for HNIs. The CBDT panel has also recommended tougher wealth disclosure norms for the rich. It has said wealth tax return forms should include both productive and unproductive assets, including those held abroad.
At present, only unproductive assets such as houses, farm houses, urban land, jewellery, bullion, cars, planes, boats and yachts have to be declared in the returns. If the panels recommendations are accepted, HNIs may have to disclose assets such as shares, bank deposits, fixed deposits, bonds and debentures in their wealth tax returns. The data that the department will receive through the returns and other intelligence will help it keep a close watch on any tax evasion, the official said. In order to ensure that there is no suppression of income or wealth, the panel has also suggested that IT returns of HNIs be scrutinised every year. At present, the tax department scans up to 2% of the total number of returns filed, on a random basis. The proposal to intensify scrutiny on HNIs comes amid growing pressure on the government to act tough on corruption and bring back black money stashed abroad. It recently set up a committee of senior tax officials to examine measures to curb generation of black money and its illegal transfer abroad. - www.economictimes.indiatimes.com
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