Quick Summary
The Income Tax Department, in a significant move to curb tax evasion, has intensified its scrutiny of High Net Worth Individuals (HNIs) suspected of underreporting their income. According to sources, the department is analysing spending patterns, high-value transactions and expense data to identify
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FAQ :
The Income Tax Department has launched a 360-degree profiling system to track High Net Worth Individuals (HNIs) who may be underreporting their income. This involves analysing spending patterns, high-value transactions, and expense data.
Sources suggest that 7-8 lakh individuals, including Hindu Undivided Families (HUFs) and firms, earn over Rs 1 crore annually. However, only about 3.5 lakh taxpayers reported such income in FY23.
The department is using data from TDS, TCS, GST records, foreign remittances, Specified Financial Transactions (SFTs), financial institutions, real estate transactions, and foreign fund transfers.
Targeted TCS measures have been introduced on high-value goods like luxury watches, handbags, sunglasses, and home theatre systems priced above Rs 10 lakh, as well as on foreign remittances and luxury vehicle purchases.
Technology, including Artificial Intelligence (AI) and big data analytics, is being used to process and compare information from various sources, enabling the department to flag returns where reported income is inconsistent with spending.
Common tactics include issuing fake invoices, inflating expenses, filing fraudulent deduction claims under fictitious business activities, and using cash transactions, particularly in sectors like real estate and hospitality.
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