The Taxman is now raiding bank a/cs, too

Faced with the task of recovering direct tax arrears of over Rs 9 lakh crore, the Income-Tax (I-T) department is tightening the screws on long-time offenders by directly recovering the amount from their personal bank accounts.

This is being done in a bid to close escape routes for defaulters, an official explained. More than 5,000 notices have been issued as part of the drive to recover tax arrears and meet the target of Rs 53,981 crore – about 6 per cent of the total direct tax arrears, for 2016-17.

Those who have not paid taxes for the past 10 years are on the depatment’s radar. 

Tax inspectors have been visiting the evaders’ bank branches to get details of linked accounts and transferring the money to the I-T department’s account, sources said. In case the recoverable amount is more than the balance, the tax department will take all the money, leaving a negative balance. If the balance covers the arrears, only the due amount will be recovered.

In one case, for instance, tax dues over seven years amounted to Rs 5.50 lakh but the taxpayer had only Rs 50,000 in the bank account. The department extracted Rs 50,000 and left the account with a negative balance of Rs 5 lakh.

There have also been cases, DNA has learnt, where tax evaders have got tip-offs and quickly transferred or withdrawn money from their linked accounts, leaving zero or minimum balance.

A Delhi-based evader recently transferred Rs 75 lakh from his linked bank account just before the tax inspector came calling. All the money had been withdrawn from the account just before the I-T official reached the branch. 

Investigation in that particular case is under way and the tax department is also looking into the role of the branch manager, who is suspected of facilitating the transaction, a tax commissioner told DNA on condition of anonymity. He didn’t disclose the name of the bank.

CCTV footage and digital footprints of the transaction are being probed, he added.

The tax department is legally empowered to seize bank accounts or properties of tax evaders if required, said a senior tax lawyer Dr Ravi Gupta. “The department can take these measures under Section 220 of the Income-Tax Act. Taxpayers, however, may avoid or seek a stay over the department’s coercive action by depositing 15 per cent of the disputed amount. However, Public Provident Fund (PPF) account is immune from such linkage for recovery of income tax dues,’’ he added.

​In June 2015, DNA had reported that the government was yet to recover direct tax arrears of over Rs 8 lakh crore. Admitting that 81 per cent of it was not recoverable, the tax department had classified it under the ‘difficult to recover’ category. This meant that there would be no recovery of Rs 6.73 lakh crore.

 According to the Central Board of Direct Taxes (CBDT) action plan for 2016-17, “The arrear demand, including demand not fallen due as on March 31, 2016, has increased from Rs 8,27,680 crore as on April 1, 2015, to Rs 9,29,972 crore (provisional) as on April 1, 2016. This arrear demand has been taken into consideration while fixing the target of cash collection of Rs 53,981 crore for FY 2016-17.”

So, for 2016-17, the total income tax recoverable base amount has been set at Rs 2,98,607 crore, about 32 per cent of the ‘yet to recover direct tax arrears’. Further, the actual target of tax recovery in the same financial year is about 18 per cent of the base amount and about 6 per cent of the ‘yet to recover direct tax arrears’