Finance ministry officials have refuted media reports that claimed that government was considering modification of income tax returns forms for an expansion of statement of financial transactions (SFT) to ensure that the high value financial transactions are filled in the ITR by the taxpayers themselves.
The officials called the reports “totally misleading”, while clarifying that the taxpayer doesn’t need to mention high value transactions in the return filed and reporting of such transactions will only be done in the most non-intrusive way by the third parties under the Income Tax Act.
Further clarifying, the official said that reporting of high value transactions is done chiefly for identifying people spending big bucks on luxuries such as business class air travel, foreign travel, expensive hotels, expensive schools and yet not paying taxes claiming to be earning less than Rs 2.5 lakh per annum and also for identifying those under reporting their earnings.
The chief purpose is to attain the widening of the tax base in a country where only a fraction of the population pays taxes, a fact highlighted by Prime Minister Narendra Modi while launching ‘Honoring the Honest’ taxation platform on August 13. The exercise of collective information on high value transactions from third parties is in line with the government’s stated principle of honouring the honest, the official said.
“The Income Tax Department is