The Telegraph
Since 1st March, 1999
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Polite tax reminder to big spenders

New Delhi, Feb. 17: If you have recently renovated your bathroom with fancy fittings or bought a plasma TV but have not bothered to file your income-tax returns, beware.

Armed with a survey on ostentatious display of wealth, the government has started dispatching “polite” missives to big spenders, reminding them to file their returns. About 10,000 such letters are expected to be despatched in 2005-06.

The government is collecting the information from sellers of expensive consumer items and the annual information returns (AIR).

Introduced in 2004, AIR mandates banks and financial institutions to furnish information to the government about high-value accounts.

A source in the revenue department said: “The government has conducted surveys and enquiries on architects, imported watch dealers, luxury sanitaryware vendors, imported car dealers and vendors of consumer goods such as plasma TV and refrigerators.”

Sources said this route was adopted primarily to elicit information on cash transactions.

“One of the major constraints was the absence of information about spending where cash was the dominant mode of payment,” the sources said.

Till January this year, 2,583 AIRs have been filed, containing details of transactions worth Rs 11,71,325 crore.

Sources said the government is now collating this information to trail black money deals and issuing letters to the transacting parties.

“In cases where information on PAN has not been supplied, a reply format calling for details of PAN and filing of returns is issued,” sources said.

The controversial banking cash transaction tax, introduced last year, has come in handy in providing leads to black money deals. Under it, tax is levied on withdrawals of Rs 25,000 and above from current accounts. Because tax is charged, such withdrawals are reported to the tax department.

“From information furnished by a Delhi-based bank, the tax department has been able to detect bogus purchases of around Rs 380 crore,” the sources said.

A similar enquiry of an account in a Delhi-based bank has revealed counterfeit sales bills of over Rs 150 crore, the sources added.

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