The Government has been taking various steps to reduce tax evasion and promote tax compliance. Some recent initiatives include:
1. Digitalization and Automation: The implementation of technology-driven platforms such as the Goods and Services Tax Network (GSTN) and the Income Tax Department’s e-filing portal has streamlined tax processes, increased transparency, and reduced human intervention, minimizing the scope for manipulation and evasion.
2. Mandatory Aadhaar Linkage: The government has made it mandatory to link Aadhaar, a unique identification number, with various financial accounts and transactions. This helps in tracking and verifying individuals’ identities, reducing the possibility of tax evasion through the use of multiple identities or undisclosed income.
3. Benami Transactions (Prohibition) Amendment Act: The Benami Transactions (Prohibition) Amendment Act, 2016 provides stricter provisions to curb benami transactions, where properties are held in the name of another person to evade taxes. This act empowers authorities to confiscate and prosecute those involved in such transactions.
4. International Tax Cooperation: The government has taken steps to enhance international tax cooperation and curb tax evasion through initiatives like the Common Reporting Standard (CRS) and Tax Information Exchange Agreements (TIEAs). These mechanisms facilitate the exchange of financial information with other countries, enabling better detection and prevention of cross-border tax evasion.
5. Increased Scrutiny and Data Analytics: The tax authorities are leveraging advanced data analytics tools to identify potential cases of tax evasion. They are conducting extensive data matching exercises, analyzing financial transactions, and using artificial intelligence to detect discrepancies and anomalies in tax filings, leading to targeted scrutiny and investigation.
6. Whistleblower Mechanism: The government has introduced a robust whistleblower mechanism to encourage individuals to report instances of tax evasion. The provision of anonymity and rewards for credible information has incentivized taxpayers and professionals to come forward with valuable information on tax evasion cases.
These measures collectively aim to create a more transparent and compliant tax environment, deter tax evasion, and ensure that taxpayers meet their tax obligations. By leveraging technology, strengthening legal frameworks, and fostering international cooperation, the government is committed to reducing tax evasion and promoting a culture of voluntary tax compliance.
