CBDT issues Central Action Plan for FY25, sets Income-Tax department roadmap — tax demands, cash transactions, arrears

The Central Board of Direct Taxes (CBDT) has released its Central Action Plan (CAP) for FY2024-25, outlining a roadmap for the Income Tax (I-T) Department, ANI reported. CAP Fy25 comes as India approaches the centenary of its independence in 2047.

The action plan aims to quickly resolve high-priority tax demand cases, widen the tax base, and identify cash transactions of more than ₹2 lakh in high-risk sectors such as hotels and luxury retailers, among others, the report said.

The board has also identified the cases which constitute the top 5,000 tax arrears, and make up nearly 60 per cent of the total ₹43 lakh crore outstanding tax demand, it added.

CBDT's Central Action Plan Recommendations

• To address these high-priority cases, the Plan recommends forming a special team in each Principal Chief Commissioner of Income Tax zone led by the Pr. CCIT. They will conduct a "thorough analysis" of the identified cases.
• The list of cases will be provided by August 15, and the analysis is expected to be completed by September 30, it added.
• To widen the tax base, the Plan seeks to encourage voluntary compliance. It calls for the identification of high-risk sectors (e.g. hotels, luxury retailers, and medical facilities), which "frequently circumvent reporting requirements". The idea is to track for cash transactions exceeding ₹2 lakh in these sectors.

• For this, the CBDT has mandated the implementation of a verification process to scrutinize high-value consumption expenditures and ensure accurate reporting.
• The Plan also highlights the need for stringent compliance with Section 139A of the I-T Act, which requires the use of PAN for specified transactions. However, the current lack of a mechanism to ensure compliance has led to widespread circumvention.
• To address this issue, it directs the Directorate of Systems and the Directorate of Intelligence and Criminal Investigation (I&CI) to identify authorities not validating PANs during transactions.
• The CBDT has set a September 30, 2024, deadline for identifying such authorities. Its goal is to achieve 100 per cent PAN validation by March 31, 2025.

More About CAP FY25

CAP FY25 is structured in 19 chapters, each addressing key areas such as budget target allocation, reduction of arrear demand, litigation management, service delivery standards, and grievance redressal. It also focuses on enhancing faceless assessments, jurisdictional and central charges, to streamline tax administration and improve taxpayer experiences.

To ensure the timely completion of scrutiny assessments, the CAP mandates that all assessments be finalised at least a month ahead of the limitation date. Thus, for the current assessment cycle, which ends on March 31, 2025, the CBDT has set a target of completing 70 per cent of cases by December 31, 2024, and 100 per cent by February 28, 2025.

Additionally, the CAP emphasizes the importance of verifying high-risk remittance data to curb tax evasion and ensure compliance.

The CBDT has set an ambitious target for the current financial year: increasing the number of new tax filers by 10 per cent of the filer base at the end of FY 2023-24. And although slightly lower than the 11.9 per cent increase achieved in the previous fiscal year, this target reflects the government's commitment to expanding the taxpayer base and enhancing tax compliance.

(With inputs from ANI)