Income tax officers have now been given the power to survey and search the premises of any NGO post Budget 2017. They have also been given the power to start inquiries into establishments without having to get approval from their higher ups. When they conduct searches or inquiries, they will not be required to state the reason for their actions. The officers will also be allowed to add, provisionally, any property owned by assessee for the purpose of tax computations but only if they have an approval to do so.
The stated purpose of these decisions is to reduce the workload on the department and also to ensure that the country’s revenue interests are safeguarded. The government has introduced General Anti Avoidance Rules but their implementation has be postponed to 2018. However, this move has left industries, traders and others a bit concerned as such powers, according to them, open the door for harassment and misuses. THere are also fears of double taxation in the case of dividend taxation.
The CEO of Dhruva Advisors even said that while he was in favour of the government’s attempt to increase the number of people paying taxes, it was also incumbent on them to ensure that such powers not being misused. Many feel that since India is moving towards a digital economy, instead of handing out summary powers such as these, things like big data mining should be used to identify tax evasion. Some even feel that tax officers will require more training on GAAR before they can be allowed to exercise their new powers.