Finance Minister is happy that Tax GDP ratio of our country is improving. What makes the Tax – GDP Ratio better? Any guesses!

Better tax compliance by the citizens of country is one of the reasons for improvement in Tax – GDP ratio. We can put it the other way round that any form of tax evasion is getting tougher day by day as Finance Ministry is in no mood to let it go easy for tax evaders. Gone are the days when you could enjoy spending through credit card without disclosing the same. Don’t be taken aback if you spend lavishly through Plastic Card (debit / credit card) and IT department knocks your door to explain the source of income. Few months back ET came with a headline that Finance Ministry is ready with a database which gives detail of amount spent through Credit Cards. So, you are trapped if you carry 10 credit cards in your wallet and the bills are paid out of undisclosed income.

As new and better technology comes in, every move we make becomes transparent and gets monitored. Let me try to explain the technology. Whenever a purchase is made through credit card, the same can easily be related to the corresponding PAN card (PAN card details submitted at the time of purchase of credit card) as credit card is linked with it. If the income disclosed in the tax return is in parity with the amount spent, there are no issues but if there is a huge difference between the two, IT department is not going to spare the tax evader. If the income disclosed in the return is on lower side, it explains the fact that the credit card holder is earning money from unaccounted sources and he is not paying tax on the same. Next time when you go shopping make sure that every purchase you make is in correlation with the income disclosed in the tax return or you have sufficient white money to explain the payment of the bill.

A smart tax known as Banking Cash Transaction was introduced by PC in the year 2005-06 for the same purpose and has brought a huge sum of black money under the tax net. The focus of this tax is on indigenous businessman who are making huge money and not paying taxes. Finance Minister announced in this year budget that BCTT has accomplished its purpose and is expected to be waived in the next budget.

It is possible to track unaccounted income because of improvised technology and better regulatory moves made by the department. Still there is a huge amount of unaccounted income in the country which requires continuous monitoring. As the unaccounted income comes under tax net, the honest tax payers can expect some relief from Finance Minister.

Happy spending but share it with Income tax department!

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