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Old 23rd May 2016, 18:51   #1
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Default Income Tax Department procures customer data from luxury car dealerships

Well, we've certainly come a long way. 3 decades back, whoever bought a Maruti 1000 was sure to receive a friendly call from the IT department.

Now, it's Lamborghinis .

Full Economic Times Article

Quote:
Looking to join the dots, the department is cross-checking income declarations with data from luxury car dealerships.

"The people in the higher bracket are not paying the correct amount of taxes. This is a fact," revenue secretary Hasmukh Adhia told AFP of the new initiative. "We need to do something about it. We are taking a lot of enforcement action."
Quote:
The department, in its push to go after big evaders, is now chasing Lamborghinis and Audis after covering week-long, multi-million dollar weddings, parties and big shopping binges.
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Old 23rd May 2016, 19:30   #2
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Default Re: Income Tax Department procures customer data from luxury car dealerships

I read this article few days back.

http://www.rediff.com/business/colum...s/20160520.htm

While i do not want to generalize, i'd not be surprised if tax collection is low. We donate wealth to religious institutions, but do not like paying tax. Wouldn't latter be more important than former? Some of the so called "leaders" prefer exemption at the toll booth even though they own a mercedes benz. Why such mentality. Is it because we are so fed up with the tax regime/structure/use of tax funds that we do not want to pay tax ?

Or save every penny possible to be rich even when we know that our life span in this world is limited ? I am not able to understand.

Last edited by sunishsamuel : 23rd May 2016 at 19:32.
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Old 23rd May 2016, 19:43   #3
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Default Re: Income Tax Department procures customer data from luxury car dealerships

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Originally Posted by GTO View Post
Well, we've certainly come a long way. 3 decades back, whoever bought a Maruti 1000 was sure to receive a friendly call from the IT department.
It was a joke then that, the IT personnel will be waiting at one's door step when the Daewoo Cielo is bought home.
Jokes apart, IT Department has become too serious looking into transactions and bank accounts.
It is rumoured that all these are to help curb soaring land prices to help home-less and needy to afford a house.
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Old 23rd May 2016, 22:38   #4
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Default Re: Income Tax Department procures customer data from luxury car dealerships

Damn! I think I will be cancelling that Lamborghini booking I made last month.

My file was picked up for income tax scrutiny last year, and the whole experience was quite an eye opener. I always had this negative opinion about people working in Govt departments, but what I found was -

1) Income Tax Officers seem to be well dressed and fluent in communication (English)
2) The IT Office ambience was like a software company, with employees who looked quite busy.
3) The ITO I met was friendly (I was expecting hostile behavior) and explained the entire "scrutiny process".
4) Some part of the scrutiny process can be done over email (sending documents, explaining certain investments etc)
5) Finally, I was very impressed by logical thinking /reasoning applied by the Officer when we were interacting. I really did not expect that from a Govt officer!
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Old 23rd May 2016, 22:48   #5
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Default Re: Income Tax Department procures customer data from luxury car dealerships

Good! I am very happy!. At last the government in general and IT department in particular have the tools and willpower to connect all the dots and catch these tax evading crooks. With a scrutiny of foreign travel, expensive gifts, expensive hotel bills, high end cars, purchase of property, all linked via PAN card and transaction details, its very difficult for the black money rats to spend their ill gotten loot.
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Old 23rd May 2016, 23:01   #6
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Default Re: Income Tax Department procures customer data from luxury car dealerships

The bracket should be expanded to include all private 25L+ vehicles in my opinion. While direct tax collections are going down, the sheer number of such vehicles are going up each day. Needs to be looked into.

Quote:
Originally Posted by sunishsamuel View Post

We donate wealth to religious institutions, but do not like paying tax. Wouldn't latter be more important than former?
OT: We donate to religious institutions with the expectations of more rewards (material, non material). So, it's like an investment in the stock market. But a tax does not give us any direct returns, but helps others. And we Indians don't like good things to happen to others unless better things happen to us. No offence to any religious person however.

Last edited by TD_GHY : 23rd May 2016 at 23:03.
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Old 24th May 2016, 00:20   #7
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Default Re: Income Tax Department procures customer data from luxury car dealerships

I remember when the Cielo was launched - people who had booked it started receiving extortion calls from the Bhai's.
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Old 24th May 2016, 01:30   #8
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Default Re: Income Tax Department procures customer data from luxury car dealerships

But would this be enough ? I mean chasing luxury car purchases? I am told by leasing company that it seems a reasonable number of cars in the high end segment are now purchased via the leasing route, in the name of some company. How can IT department crack down in such cases ?
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Old 24th May 2016, 10:18   #9
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Default Re: Income Tax Department procures customer data from luxury car dealerships

I just tweeted about this concept the other day - the government should target consumption in order to stamp out black money. Visible consumption like this is the tip of the proverbial iceberg. All the audis/BMWs bought by gurgaon property dealers should've been tallied against their tax returns.

Similarly, I think the day govt audits doctor tax returns against Practo bookings, a lot of black money will vanish, but these apps may die too.

Similarly, if the garbage bins of roadside food vendors were to be inventoried, you would find many of them liable to pay a not-insignificant level of tax.

PS: I know of a Mr X who had their relative buy a luxury car, while Mr X gave their relative the EMI in cash (plus a hefty premium) every month - only to avoid detection by tax authorities.
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Old 24th May 2016, 10:21   #10
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Default Re: Income Tax Department procures customer data from luxury car dealerships

I partly agree with the government. But only partly. Yes, higher bracket is avoiding taxes as they route everything via companies or corporations. Thereby they reduce their tax liabilities by a considerable amount.

Also, a bulk of people in India, primarily those who do not declare their income, the government should target.

Here is a link to an article which elaborates on the same:

http://profit.ndtv.com/news/budget/a...prised-1274917

Certain steps have been taken which might improve the situation, but there is still a long way to go.
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Old 24th May 2016, 10:31   #11
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Default Re: Income Tax Department procures customer data from luxury car dealerships

Why is this even a news? Did IT discover this yesterday? Or is it a warning to folks who are buying Lamborghinis?

PS: Couple of years back, I had purchased laptop costing over a lakh. I got a letter from IT asking me to confirm the purchase (probably to link to my PAN). I think IT is already monitoring all high worth transactions (all above 1 lakhs).
Quote:
Originally Posted by shivs2003 View Post
Also, a bulk of people in India, primarily those who do not declare their income, the government should target.

Here is a link to an article which elaborates on the same:

http://profit.ndtv.com/news/budget/a...prised-1274917

Certain steps have been taken which might improve the situation, but there is still a long way to go.
It is difficult to get people declare their income. Hence the rise in indirect taxes like service tax, cess et all. Salaried people pay income tax & indirect taxes, while the majority of the rest, pay just indirect taxes. So income tax policy is unfair to salaried people. I would like Govt to abolish Personal income tax ( )and add more of indirect taxes ()

Last edited by msdivy : 24th May 2016 at 10:39.
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Old 24th May 2016, 11:23   #12
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Default Re: Income Tax Department procures customer data from luxury car dealerships

From what I understand, any business that accepts "cash" for payment has a big incentive to evade tax. Cash earned this way mostly goes into -

1) Gold
2) Property
3) Bank accounts

How many times have you read something in the lines of "Govt official's house raided. He had 30 bank accounts, 3 properties etc".

See, even though you need a PAN number to open a bank account, the IT official does not have access to these details. The IT officer has to ASK the assessee about his/her bank account details. The IT officer has to ASK the tax payer about his mutual fund/brokerage account details.

There lies the biggest loophole in catching tax evaders.

Solution is very simple - the computer/network infrastructure of Income tax department needs to be upgraded immediately. Since all bank accounts are linked by PAN number, the way it should be is -

1) The Income Tax Officer enters the PAN number of the tax payer into the system
2) The system scans the database and lists out all the bank accounts, brokerage, mutual fund investment, property, car and gold purchase details.
3) Confront the tax payer with these and investigate further.

Just implementing such a database/information network, tax evasion will crash dramatically.

Trust me, the income tax officers investigative & probing skills are pretty impressive, from what I have seen. They are seem to be tech-savvy too. They just don't have enough help from technology.
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Old 24th May 2016, 11:39   #13
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Default Re: Income Tax Department procures customer data from luxury car dealerships

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Originally Posted by smartcat View Post
Solution is very simple - the computer/network infrastructure of Income tax department needs to be upgraded immediately. Since all bank accounts are linked by PAN number, the way it should be is -

1) The Income Tax Officer enters the PAN number of the tax payer into the system
2) The system scans the database and lists out all the bank accounts, brokerage, mutual fund investment, property, car and gold purchase details.
3) Confront the tax payer with these and investigate further.
All banks deduct tax on deposits - savings account, fixed & others and deposit with IT. Form 26 AS lists these. So do they have a some information on bank accounts. Yes, the system must be enhanced to detect tax evaders.

Also the Govt must push people towards using cards & online transactions, by abolishing cards charges, internet fees. They must stop the Rs 500 & Rs 1000 rupee notes - just use card to make transactions above 100.
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Old 24th May 2016, 12:01   #14
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Default Re: Income Tax Department procures customer data from luxury car dealerships

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Originally Posted by smartcat View Post
1) The Income Tax Officer enters the PAN number of the tax payer into the system
2) The system scans the database and lists out all the bank accounts, brokerage, mutual fund investment, property, car and gold purchase details.
3) Confront the tax payer with these and investigate further.
.
Nope. It won't work. Income tax department should ask the govt to pass a law that all mattresses should be fitted with smart money detecting device which will send an alert if cash is stored under them.

Black money is not kept in bank accounts till its laundered through a tax haven. So there are two angles

1. Big ticket purchases (what they are doing now)
2. Tax treaties.

Nobody is going to earn black money and put it in bank accounts. Its sent abroad, shown as revenue of some company in a tax haven and brought back in the stock market, and then becomes white due to nil long term capital gains tax.

There are companies which exist to facilitate this. All it takes is 1000$ to open a shell company complete with office and directors in a country like Belize.

That said, this car purchase tracking if done for all vehicles (even those costing 5L) would net a lot of medium level traders who earn 15-20L/year yet pay nil tax.

Last edited by tsk1979 : 24th May 2016 at 12:04.
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Old 24th May 2016, 12:11   #15
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Default Re: Income Tax Department procures customer data from luxury car dealerships

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Originally Posted by tsk1979 View Post
Black money is not kept in bank accounts till its laundered through a tax haven.
That's the case only with very large fishes. I'm talking about small to medium sized ones. You know, there are literally millions of people deal with mostly cash - certain professionals, corrupt govt officials, traders, retail shop owners and the like.

Cash doesn't really go into a mattress or a locker, because tax evaders want RETURNS on their cash. It always goes into investments (deposits, gold, property, stocks, chit funds etc)
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