Income Tax Department Takes Tough Stance on Tax Underpayment by High-Net-Worth Individuals (HNIs)
In a bid to curb tax evasion, the Income Tax Department is set to take strict action against high-net-worth individuals (HNIs) who underreport their incomes, despite recent tax rate reductions. The department has embarked on a comprehensive "360-degree profiling" of individuals with annual incomes exceeding ₹1 crore, meticulously scrutinizing their financial activities and expenditure patterns.
The department's investigations have revealed a significant gap between the number of taxpayers declaring incomes of ₹1 crore or more in the fiscal year 2023 and the actual count of individuals with such earnings, suggesting potential tax underpayment. Notices will be issued to those who inaccurately reported their income once the screening process is complete.
Despite recent tax rate reductions and surcharge reductions for individuals with annual incomes of ₹5 crore and higher, HNIs continue to evade taxes. The government aims to bolster its revenue through these efforts and send a clear message to HNIs that tax evasion will not go unchecked.
To avoid scrutiny from the Income Tax Department, HNIs are advised to
- Accurately report their incomes in their tax returns.
- Maintain thorough documentation to support their claims, such as retaining expense receipts and investment invoices.
- Stay updated on the latest tax laws and regulations.
- Seek guidance from tax experts for any tax-related uncertainties.
HNIS must recognize that the Income Tax Department employs advanced tools and methodologies to detect tax evasion. Therefore, they should exercise caution and refrain from participating in any tax avoidance or evasion schemes to ensure compliance with tax laws.
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