Arun Jaitley Explains How Income Tax Returns Are Scrutinised

Finance Minister Arun Jaitley on Friday said that fear of scrutiny by income tax authorities is not an excuse for not paying taxes. A tax non-compliant person can't say that paying tax would invite further headaches, Mr Jaitley said. 

Explaining the tax scrutiny process, Mr Jaitley said: "Of those who file returns, all returns go onto the computer system directly to a central system. There is no human face. There are some alerts that come. At the end of the day, those red alerts indicate who is to be picked up for a scrutiny. You have a lot of cash withdrawals, a lot of cash deposits, you have some big property transactions...those are the kind of red alerts." 

Arun Jaitley was speaking to NDTV's Vikram Chandra at the Hindustan Times Leadership Summit. The finance minister said only about 3.5 lakh people or just one per cent of people who file returns are picked up for scrutiny every year. "To have a causal dinner time conversation and say that I won't pay taxes because I find that I would be scrutinised is a poor alibi," he said.

Mr Jaitley said just 4 crore to 4.5 crore people file income tax returns out of a population of 125 crore people. The government's demonetisation move, he said, will help crack down on black money and help increase the tax base of the country. 

The minister said the implementation of mega tax reform Goods and Services Tax or GST will also reduce scope for the generation of black money from businesses. "We are in a cusp of change. Many people in India are still trying to beat the system. Those who try to beat the system, the battle between them and the taxman will still continue," he said.