In a bid to check tax evasion, the finance ministry will shortly come up with detailed guidelines on Annual Information Return that would record high value transactions above Rs 50,000.
"The minimum size of the transaction for which an Annual Information Return will be required is Rs 50,000. However, the amount could be higher for some transactions," a senior finance ministry official said in New Delhi on Tuesday.
For share transactions, the Annual Information Return could be lower at Rs 50,000, while it could be higher for sale of an automobile at about Rs 100,000, the official said.
The figures would be listed out in the guidelines that are being drawn up by the ministry and which would be issued by this month end.
The Annual Information Returns have to be filed with the tax authorities by the third party about the high value transaction that an assessee or non-assessee has made in a financial year, an official said.
Although the tax assessee will not have to file an Annual Information Return, sources said: "In case he buys something which is disproportionate to his income, then taxmen can swoop on him on the basis of the information received through Annual Information Return."
For instance, an auto dealer has to furnish an Annual Information Return on the number of cars he sold in a fiscal year and details of the name and address of the persons buying the car.
The information collected from Annual Information Return would go into the Tax Information Network, which would then process the information on the basis of income level of the assessee.
If the transaction appears to be disproportionate to the person's income, tax authorities will know that there is tax evasion.
The Annual Information Return could also help tax department for tracking high value transaction of non-assessees.
Sources said that the Annual Information Return would help government trace persons having high income and carrying out high-value transactions but are not paying tax.
"These would enable Central Board of Direct Taxes to bring in more persons in the tax net," the official said.
The Annual Information Return was first proposed by former Finance Minister Jaswant Singh in his interim budget in February 2004 and it has been given legal shape in the Finance Act, passed by Parliament in August.
Finance Minister P Chidambaram has acknowledged that the Annual Information Return is 'a good proposal' of the previous NDA government. Chidambaram retained the proposal in his own budget in July.
The Annual Information Return, along with TIN, would enable the tax department to significantly reduce tax evasion and widen the tax base, sources said.
With the operationalisation of TIN, most of the corporate transactions are now being captured and these was in the process of extended to personal income tax as well.
Ultimately, TIN will make the entire collection of direct taxes paperless and do away with the present challan system.
All details pertaining to assessment of individuals and corporate tax returns and refunds would be through TIN.
TIN would also eliminate the interface of assessees with taxmen thereby reducing corruption and making administration more efficient.
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