CBDT directs tax sleuths to survey, inspect high value transactions

Banking companies, co-operative banks, trustees of mutual funds (MFs), post offices, registrars, and others who are mandated to file the statement of financial transaction (SFT) report on high-value transactions have come under the income-tax department’s (I-T) scanner. The Central Board of Direct Taxes (CBDT) has directed tax sleuths to conduct quarterly ‘survey and inspection’ of these entities to determine the correctness of the statement filed by them.


To track high-value cash transactions, the centre had in January 2017 put out a new rule wherein it had mandated all goods and services providers to report to the I-T department high-value cash transactions and cash receipts.


Under the new norms, cash receipts, purchase of shares, MFs, immovable property, term deposits, sale of foreign currency, etc, will have to be reported to tax authorities in a prescribed format, according to the threshold limits.


This follows a 54-page action plan drawn up by the CBDT, where an aggressive strategy was outlined to nab tax dodgers. The CBDT had circulated a strategy paper for the tax officials and laid special emphasis on a number of critical areas such as litigation management, widening the tax base, verification of non-permanent account number (PAN) data, and the processing of the foreign account tax compliance act (FATCA) data.


The CBDT has now asked tax sleuths to prepare a master list of persons who were required to submit the SFT of the financial year 2017-18 by June 30. “Access to credible and processed information is vital for the efficient functioning of the (I-T) department. It is, therefore, essential that complete and correct filing of the SFTs be ensured,” the CBDT noted. Sources say the tax authority has observed several discrepancies in the high-value transaction reporting during demonetisation.

Besides, an outreach programme would be conducted every quarter to address the grievances of these entities while filing the said reports.

Under the SFT, banks would have to report cash deposits aggregating Rs 1 million or more in a financial year in one or more accounts of a person. The same threshold will apply for term deposits in banks, but would exclude renewal of term deposits. These norms will also cover deposits and withdrawals made in post office accounts. While the registrar will have to report purchase and sale of all immovable property exceeding Rs 3 million to the I-T authorities.

Further, the action plan emphasised ways to examine FATCA data, and asked the I-T wing to take prompt action against entities identified under the same. It had also set a target and timeline to inspect and wind up the matter.

To recover the tax dues worth over Rs 50 billion from the corporate entities de-registered from the Registrar of Companies (RoC) last year, the tax department would approach the National Company Law Tribunal. The Ministry of Corporate Affairs had de-registered over 200,000 companies from the RoC last year.

The CBDT has also asked the department to check the misuse of relaxation provided for furnishing information on payments to non-residents including advance payments against imports, payment towards imports-settlement of invoice, imports by diplomatic missions, intermediary trade, and imports below Rs 500,000. The CBDT had mandated that information on all foreign payments would have to be submitted to the tax authorities, irrespective of whether they were chargeable to tax or not.

An elaborative diktat was also given to curb tax deduction at source (TDS) defaulters. “A large number of instances have been noticed where the deductors are making PAN errors in the deductee rows in the TDS statements by way of either mentioning ‘invalid PANs’ or ‘PAN not available’ in the corresponding column.

Accordingly, the tax sleuths were asked to insist upon furnishing of valid PAN by the taxpayers in case of high-value transactions.

Besides, an action plan has specifically mentioned the importance of the e-assessment project and asked the I-T to implement a plan to eliminate the human interface. 

The I-T, which has been in a proactive mode since the last couple of years, has been allocated a staggering budgetary target of Rs 1.15 trillion for the 18 I-T regions across the country, setting a target of adding 12.5 million taxpayers in 2018-19.


Action Plan for FY19
- Quarterly survey/ inspection of reporting entities required to file SFT
- Banks, financial institutions, property registrar & others are under radar
- Purchase of shares, mutual funds, property, foreign currency, cash receipts need to be reported
- To conclude actionable cases identified under FATCA
- Disposal of non-PAN and demonetisation data by December
- To file petition in the 
- NCLT to recover tax dues from de-registered firms
- Target to add 12.5 million new taxpayers

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