Quick Summary
A Parliamentary Standing Committee has strongly criticised the Income Tax Department's refusal to bifurcate business and individual income under Personal Income Tax (PIT), citing it as a major hurdle in understanding true income patterns and framing effective tax policies. The committee, in its recent report, reiterated its demand for a detailed action plan with clear milestones and timelines to segregate income data, especially since a significant portion of non-corporate business income-estim
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FAQ :
The committee is criticising the IT Department for not segregating business and individual income under Personal Income Tax (PIT), which they believe distorts income patterns and hampers effective tax policy.
An estimated Rs 1.5 lakh crore of non-corporate business income is currently included under PIT.
Without segregated data, it's difficult to understand the actual contribution of individuals versus non-corporate businesses, identify potential tax evasion, and address the specific needs of different taxpayer categories.
The Ministry of Finance stated that segregating income data is 'not feasible' as the current system broadly divides direct taxes into Corporate Income Tax (CIT) and Personal Income Tax (PIT), with PIT encompassing various non-corporate entities and the returns not being structured for head-wise segregation.
Yes, the committee believes that with all income tax data now digitised, there are ample opportunities to leverage technology and structured data for clearer classification and reporting.
The committee is demanding that the Ministry of Finance furnish a concrete action plan with defined milestones and timelines for achieving PIT data segregation.
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