CBDT Denies Report That Said Tax Filing Decreased in Note Ban Year

The Indian Express report said that in note ban year, there was a 10-fold increase in the number of ‘stop filers’.

Image used for representational purpose. 

(Photo: Rhythum Seth/ The Quint)

The Central Board of Direct Taxes (CBDT) on Thursday, 4 April, called false a news report which claimed that there had been a spike in the number of income tax “stop filers”.

Stop filers are people who had filed their return in the previous year and are liable to file it again but haven’t done so.

The Indian Express report had said that in the year government demonetised 500 and 1000 rupee notes, there was an increase in the number of stop filers by almost 10-fold.

The report said the increase could have been due to “loss of jobs or drop in income”. However CBDT called it “factually incorrect and utterly erroneous interpretation of facts”.

According to the report, the number stood at 8.56 lakh in 2015-2016 and went up to 88.04 lakh in 2016-2017.

The daily also adds that the number had been “consistently falling” from 37.54 lakh in 2013 to 27.02 lakh in 2014, 16.32 in 2015 and 8.56 in 2016.

A tax officer told the daily that typically the increase in the number of stop filers is due to “compliance and enforcement gap” but the sudden increase can’t be because of sudden change in compliance behaviour.

DROP IN THE NUMBER OF TAX DEDUCTEES

The daily also reported that the tax data for the year 2016-2017 shows a drop in the number of tax deductees (33 lakh TDS deductees) who didn’t file returns, which according to a tax officer could be suggestive of a “fall in economic activity”.

Speaking to The Indian Express, Central Board of Direct Taxes said (CBDT), “There are a large number of persons (more than 1.75 crore) in whose case TDS/TCS is deducted, but who do not file return. Majority of such persons do not have taxable income. Assessment year wise analysis of such taxpayers and the reasons for any unusual variation in their numbers over different assessment years will require some more time.”

WHY THE INCREASE IN TAXPAYER BASE?

According to The Indian Express, in April 2016, the CBDT changed the definition of tax payers to include people who paid tax through TDS/TCS under the definition of tax payers even if they didn’t file returns. The definition of tax base too was tweaked to accommodate such people.

Tax officials said that a change in the definition could be a reason for the jump in tax payers base.

However, the CBDT denied changing the definitions and said that “these non-legal words of common parlance were defined for the first time for consistency within the department and across different time periods.”

The daily reported that after adding the new definition in 2016, the tax department added 1.13 crore TDS deductees, who had never filed returns. The department also added 39.34 lakh TDS deductees to the taxpayers base between 2014-2015 and 2016-2017.

(With inputs from ANI and The Indian Express)