The Income Tax Department is gearing up to crack down on individuals who have failed to respond to their income tax notices.
In an effort to ensure compliance, the department will initiate compulsory investigations against these taxpayers. The department has recently released guidelines outlining the process.
Section 142(1) of the Income Tax Act: An Overview
Under Section 142(1) of the Income Tax Act, tax officers have the authority to issue notices to individuals and request clarifications.
In cases where no response is received, the concerned taxpayers may be required to provide necessary information in the prescribed manner.
Additionally, the department will investigate instances where law enforcement agencies or regulatory authorities have provided specific information regarding tax evasion.
Issuance of Fresh Notices by the Department
According to the guidelines, the authorities will send fresh notices to taxpayers by June 30, addressing discrepancies in reported income.
These notices will be issued under Section 143(2) of the Income Tax Act. Subsequently, taxpayers will be obligated to provide relevant documents to support their claims.
Renowned Economist Urges Reduction in Income Tax Rates
Surjit Bhalla, a prominent economist, has advocated for a reduction in income tax rates in India. Bhalla suggests that despite not being the wealthiest nation.
India’s tax collection is disproportionately high. To foster economic growth, Bhalla recommends lowering the current income tax rate of approximately.
40 percent to 25 percent. He highlights the importance of reducing taxes overall and ensuring it benefits all sections of society.
India’s Tax Collection and Direct Tax Rate
Bhalla notes that tax collection by state, central, and local bodies accounts for approximately 19 percent of India’s GDP.
He suggests gradually reducing this percentage by two points. In terms of direct taxes, Bhalla proposes that the total tax rate should not exceed 25 percent.
inclusive of surcharges. Currently, the maximum income tax rate in India stands at 39 percent.
and Bhalla emphasizes the need to provide tax relief to a broader segment of the population. During the financial year 2022-23.
India’s gross direct tax collection rose by more than 20 percent, reaching Rs 19.68 lakh crore.
