In a bid to strengthen revenue collection and plug tax leakages, the Central Board of Direct Taxes (CBDT) has instructed income-tax officials across the country to intensify monitoring of top advance tax payers, including both individuals and corporates, for bogus claims of exemptions and deductions.
The directive, part of the Central Action Plan (CAP) 2025-26, aims to reassess the advance tax liabilities of high-value taxpayers and eliminate fraudulent or incorrect claims that result in substantial revenue loss. The move comes as the government sets an ambitious ₹25.20 lakh crore target for direct tax collections in the current financial year.
What Is Advance Tax?
Advance tax refers to the income tax paid in instalments during the financial year, rather than at year-end. It helps maintain consistent cash flow for the government and reduces the year-end burden on taxpayers.
Key Measures Outlined in CBDT's Plan
- Reassessment of Advance Tax Liability: Tax officials have been directed to revisit estimates filed by top taxpayers and ensure accuracy.
- Detection of False Exemptions and Deductions: Field officers must flag suspicious claims under various sections, particularly where misuse is frequent.
- Encouragement for New Tax Regime: Taxpayers are being nudged to opt for the simplified tax regime, which eliminates deductions and exemptions, thereby reducing scope for manipulation.
- Regional Revenue Profiling: Districts and zones will be profiled based on net positive or negative revenues, with special focus on regions where tax collections have declined.
- Aggressive Arrears Collection: Tax authorities have been ordered to prioritize the recovery of pending dues along with current collections.
FY 2025-26 Direct Tax Collection Targets
- Corporate Tax: ₹10.82 lakh crore
- Non-Corporate Tax (including personal income tax): ₹13.60 lakh crore
- Securities Transaction Tax (STT): ₹78,000 crore
A senior tax official confirmed, "Special emphasis is being placed on identifying non-compliant taxpayers and collecting both current and arrear dues. Monitoring advance tax and ensuring compliance will be central to meeting this year's targets."
Implications for Taxpayers
The heightened scrutiny means top taxpayers must ensure accurate reporting and documentation of exemptions and deductions. Any mismatch or misreporting could attract reassessment and penalties. Taxpayers opting for the old regime must particularly be cautious of inflated claims.
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