2024-08-12 18:39:21
The move was taken following the discovery of discrepancies between overseas remittances and expenditure and the income declared by individuals, as well as lapses in tax collection at source (TCS), The Economic Times has learnt.
Officials privy to the matter said the commission has asked field agencies to initiate verification process and scrutinize Form 15CC — the quarterly disclosure statement of outward remittances filed by authorised dealers with the income tax department.
They said the 15CC form data has been collected and categorised since 2016 and will be made available for analysis starting this year.
“A comprehensive review was recommended last year… This will be made available to field formations for the first time (soon),” a senior official told The Economic Times.
The official said the move would help the government detect cases where taxpayers had remitted money but not reported it in their returns. “The entire exercise will curb tax evasion and ensure that legitimate remittances are facilitated while preventing abuse of relaxations in reporting of foreign remittances,” the official added. The committee will prepare a list of high-risk cases based on a review of data for 2020-21 and beyond.
It has directed various field units to prepare detailed standard operating procedures (SOPs) to detect high-risk cases and submit a list of such cases by September 30.
The government has set December 31 as the deadline to send the first notice to those found to have undeclared income.
Elaborating on the irregularities, the officials mentioned above said that in one case, an individual who declared an annual income of Rs 5 lakh was found to have remitted Rs 15 lakh abroad through three different dealers in the last three years so as not to attract mandatory TCS and escape the tax net.
Under the Liberal Remittance Scheme (LRS), the government levies 20% TCS on foreign remittances above Rs 7 lakh, with some exceptions for medical and education expenses.
Under the reporting of foreign exchange remittances through Form 15CC, no further details are required if the remitter or deductor certifies that the remittance is not taxable – such as payments by an importer, payments by a company to its subsidiary or loans to non-residents.
However, officials said the department had identified some possible abuses of the relaxation.
“Monitoring these waiver payments is critical to prevent abuse of these benefits,” the official said.
The CBDT has asked banks to report total foreign exchange outgoings as a separate category, besides total credit card outgoings, even if they do not charge TCS. These data are recorded in the annual profit and loss account for the purpose of assessing income tax. The government has increased TCS on foreign remittances under LRS from 5% to 20% from October 1, 2023.
Budget 2023 also brought international credit card payments under the ambit of LRS and implemented TCS on such transactions. However, the policy was later withdrawn following widespread criticism.
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