CBDT outlines to the FM on how personal income tax zoomed

Personal income tax as a percentage of the Gross Domestic Product has zoomed from 2.11% in 2014-15 to 2.94% in 2021-22, Central Board of Direct Taxes informed Union finance minister Nirmala Sitharaman on Tuesday even as she urged the officials to expand the base of taxpayers. Moreover, tapping financial transaction data, the CBDT has been able to obtain information on about 3 crore persons in the recent past, the minister was informed.

In a review meeting the finance minister also rooted for a more taxpayer-friendly department by advising the officials for quicker resolution of their grievances and faster disciplinary action against erring taxmen.

Sitharaman also reviewed the process of handling applications for condonation of delay and granting exemptions under sections of the Income Tax Act, 1961.

Data crunching

CDBT officials told the minister that crunching and culling of data on financial transactions such as mutual funds, securities, interests and dividends has led to a huge inflow of information over the past few years. This new approach has also generated information on about 3 crore people which was not available earlier.

Tax deducted at source has also netted quite a booty for the CBDT. New TDS codes that have gone up from 36 to 65 in the past eight years have led to 144 crore transactions in 2021-22 as opposed to a mere 70 crore in 2015-16. Accordingly, the number of tax deductees has risen from 4.8 crore to 9.2 crore in the same time period.

The minister also impressed upon the officials the need to be intolerant towards administrative and procedural delays and should expedite disciplinary cases pending against various employees. She also batted for quick and appropriate action on appeals by taxpayers in a reasonable time frame.

The meeting was also attended by revenue secretary Sanjay Malhotra and CBDT chairman Nitin Gupta. Over the past few years, the finance ministry has been trying to simplify the personal income tax structure with few exemptions, comparatively lower rates, and easier compliance.

Incidentally, tapping new data sources has become a weapon that the government is planning to wield to productively. Only a day earlier, the finance minister said that her ministry is collaborating with the RBI and MeitY to crackdown on ponzi schemes which gobble up the hard-earned money of common men.