Tax Authorities Target Executives Earning Over Rs. 50 Lakh for Underreported Income and Fake Exemptions
Numerous senior executives are making yearly salaries of over Rs. 50 lakh, and they are in the eye of the Income Tax Department for reportedly underreporting their incomes and claiming unjustified exemptions by referencing bogus donations to religious institutions, charitable trusts, or educational institutions.
According to the officials of the tax department, as of now, the tax authorities have sent them multiple notices reminding them about the irregularities found in their returns and have asked them to rectify the same before the imposition of penalties. Notices have been issued addressing the executives who have not disclosed their foreign assets and overseas income, underreported stock-linked incentives, and exaggerated perquisites such as housing and travel allowances to decrease their overall taxable income.
A senior officer who did not want to reveal his identity has said that, “We have over two dozen cases where executives invested in expensive properties, more than 50 who received hefty secondary salary payments from foreign clients in cryptocurrencies, and cases involving huge donations to political parties that are neither recognised nor contesting elections.”
The officer further said, “Many taxpayers felt they could get away with foreign purchases and assets. However, with the large volume of financial data received by the government through automated exchange programmes and PAN (Permanent Account Number)-linked tracking, it is increasingly difficult to underreport foreign transactions.”
Recently, a large quantity of Income Tax Returns (ITRs) pertaining to high-income taxpayers was examined in the present assessment cycle. During the recent Nudge (Non-intrusive Usage of Data to Guide and Enable) campaign, the government had sent notices to several executives, informing them about the discrepancies found in their returns and advising them to furnish a revised return to be safe from litigation.
Several chartered accountants’ (CAs) returns were found where the taxpayer had not disclosed foreign assets, including properties bought in the names of their minor children and spouses, foreign stocks, income received in cryptocurrency, and money kept in overseas bank accounts. In simple terms, they did not report money and assets they owned outside the country, and some were kept under family members’ names to avoid disclosure.
The official has said that the tax department is planning separate punishments for such chartered accountants (CAs). The department also highlighted a common pattern noticed: the individuals who had the same chartered accountants were found to be donating to the same organisations.
The present action of tax authorities matches the government’s larger initiative to push for tighter compliance and data-driven enforcement. In the previous few years, the tax department has been utilising the tools of artificial intelligence (AI) to find out discrepancies between declared income, tax deducted at source records, and third-party financial data.
As per the data available on the tax portal, this financial year, over 2 million taxpayers have furnished an updated return for the assessment years 2021-22 to 2024-25 and have paid extra taxes amounting to Rs. 25,000 crore. Except for this, over 1.5 million ITRs have been revised this assessment year.
