MUMBAI: The Comptroller and Auditor General of India (CAG) has discovered that agricultural profits of practically Rs 500 crore changed into allowed as exempt by the profits-tax authorities with out adequate verification.
The auditor’s teach on bid taxes for the 365 days ended March 2018 eager on exempt profits – each agricultural and that which is earned by charitable trusts.
CAG has rapid that the I-T department reexamine all instances the attach agricultural profits exceeds a determined threshold – articulate Rs 10 lakh – to guarantee that that exemption is allowed handiest to staunch taxpayers.
CAG said it chose to center of attention on this topic because the Tax Administration Reform Commission had neatly-known in its 2014 teach that agricultural profits of ‘non-agriculturists’ is being increasingly extra frail as a conduit to keep away from tax and for laundering funds.
In its teach, CAG pointed out that it reviewed 6,778 scrutiny review issues and discovered that in 22.5% (or 1,527 instances), claims for exemption of agricultural profits were allowed with out verification of supporting documents.
These documents encompass land records, profits and expenditure statements, reduce knowledge, funds, invoices, which might possibly put veracity of the claims. The Central Board of Remark Taxes (CBDT) has no longer space any explicit directions for scrutiny of agricultural profits exemption claims. Nonetheless, I-T officials must insist staunch thru review on manufacturing of proof from taxpayers.
The apex court has held that the onus lies on the taxpayer to place the genuineness of the claims made, the CAG added. The CAG moreover neatly-known that data entry errors referring to agricultural profits, which live to speak the story within the I-T data indecent, favor to be rectified.
A convention-up take a look at take a look at of exemptions to charitable trusts staunch thru fiscal 2017-18, performed by the CAG, showed a whole lot of irregularities. These incorporated grant of exemption even the attach the activities weren’t charitable in nature, or treatment by such trusts of donations (alongside with foreign) as phase of the corpus (that’s, capital) of the belief with out explicit directions from the donor. The tax compose eager is Rs 723 crore, aspects out the CAG teach.
CAG means that prior approval must always be a pre-situation for receipt of foreign donations, that are capped at 5-10%. Amendments must always be performed within the I-T Act to create trustees moreover liable for violations. Lastly, varied provisions of the I-T Act must always be streamlined to put collectively uniformly to all trusts, regardless of after they were space up.