The new areas are linked to sectors that have grown significantly in recent years -- the stock market, real estate and commodity trade. There were 15 categories for compulsory scrutiny in 2005-06, which increased to 19 in 2006-07 and 29 this financial year.
The department issued an internal circular for selection of cases for scrutiny in 2007-08 shortly after the chief commissioners and directors general of income tax conference on July 17 and 18.
The income tax department will also increase scrutiny of real estate transactions (see chart).
"It is a logical step. The information gathered through annual information returns will now be compared with the tax returns of individuals to see if taxes are paid correctly or not," said a consultant with a leading tax advisory firm.
The Central Board of Direct Taxes has also raised the threshold limit of transactions for several other categories of assessees whose returns were already under mandatory scrutiny. This means fewer assessees will be under the scanner and the department can focus on transactions in which the possibility of tax evasion is high.
The amended instructions also direct tax officers to take up all returns for mandatory scrutiny in which the total deduction claimed under Chapter VIA (on various deductions allowed to taxpayers) is over Rs 25 lakh at locations other than those linked to the income tax department's computer network. The earlier limit for scrutiny was Rs 5 lakh.
Similarly, all cases of commodity brokers as well as their sub-brokers earning brokerage of Rs 1 crore or more will be compulsorily scrutinised along with stock brokers.
Returns of professionals whose annual gross receipts are over Rs 20 lakh will also come under scrutiny. The earlier limit was Rs 10 lakh. While there was no limit earlier on deductions claimed under section 10A, 10AA, 10BA and 10B (special deductions given to small entrepreneurs) for compulsory scrutiny, all returns in which deductions claimed are above Rs 25 lakh will now be scrutinised.
Returns filed by statutory bodies and marketing committees will also be mandatorily scrutinised.
TEN UNDER THE LENS
(New categories under income tax scrutiny)
Unsecured loans above Rs 25 lakh
Loss shown from house property above Rs 2.5 lakh
If investment in property is more than five times of gross income
Sum of short-term and long-term capital gains is over Rs 25 lakh
Sale property shown in AIR, but no capital gains declared
Commission paid in excess of Rs 10 lakh
Realty businesses with gross turnover exceeding Rs 5 crore
Hotels and tour operations with gross turnover over Rs 5 crore but net profit shown less than 0.05 per cent
Depreciation claims in excess of Rs 25 lakh
Net agricultural income more than Rs 10 lakh