The Central Board of Direct Taxes is developing a data bank on tax returns and expenditure by tax payers to improve the quality of assessments and revenues, which could lead to reduction in raids, P L Singh, chairman, CBDT, said.
The data bank would help the income tax department to check if returns have provided adequate information about the expenditure and keep a track of the tax payer base, Singh said, addressing a tax seminar organised by the Indian Merchants' Chamber in Mumbai on Saturday.
If it was found that the taxpayer has not provided proper information, including source of funding, the department could ask the assessee to file a revised return, he said adding, the information in the data bank would reduce the need to conduct raids and eliminate harassment to taxpayers.
He, however, did not elaborate on the time frame in which this data bank would be in place.
On computerisation of the tax network, Singh said the entire work was expected to be complete by the end of the year.
CBDT was also working on plans for electronic filing of tax returns using digital signatures, he added.
IMC president Shailesh Haribakti said the tax administration has improved in the last few years and procedures have also been eased.
The tax payers base would not grow significantly in absence of the value added tax system, he said adding, VAT would bring transparency in the system and make taxpayers including corporates to provide more details on expenses.
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