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I-T department has no mechanism to ensure reality firms file their taxes: CAG
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SME Times News Bureau | 12 Feb, 2019
With several real estate companies still outside the tax net, there is
no mechanism with the Income Tax (I-T) Department to ensure that all the
registered companies have PAN and are filing their income tax returns
regularly, the Comptroller and Auditor General (CAG) has found in its
performance audit of the real estate sector.
The report said that
the I-T Department was not effectively using other third party data or
surveys to widen its tax base in the real estate sector.
The
report on "Assessment of Assessees in Real Estate Sector", tabled in the
Parliament on Tuesday, added that transactions with undervalued sales
consideration were generating black money in the process.
"Audit
notices several companies outside the tax net. There is no mechanism
with Income Tax Department to ensure that all the registered companies
have PAN and are filing their income tax returns regularly," the report
said.
"Due importance was not accorded by the Income Tax
Department to monitor non-PAN transactions despite these being under the
highest risk category from the point of view of tax evasion in general
and due to these being transactions of real estate sector in particular.
There was a lack of mechanism in the Income Tax Department to ensure
that persons involved in high value sales of immovable properties
offered capital gains for tax," it added.
The CAG also noted that
the benefit of section 80-IB(10) of the Income Tax Act - which provides
100 per cent deduction of profit derived from construction of housing
projects on certain conditions - was being enjoyed by non-eligible and
unintended groups.
"There is multiplicity of criteria for
classifying housing projects for economically weaker sections or low
income groups by the government on the basis of size or affordability of
the dwelling units.
"Enforcement of conditions for allowing
deductions under Section 80-IB(10) was weak, leading to benefits being
availed by non-eligible persons/unintended groups. Thus the targeted
groups could not be benefited and the revenue foregone on this count
year after year by the government may have benefited unintended
persons," it said.
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