The move follows detection of cases where foreign remittances and expenditures did not align with the income declared by individuals, and lapses in tax collected at source (TCS), ET has learnt.
The board has asked the field formations to start the verification process and scrutiny of Form 15CC – a quarterly disclosure statement of outward remittances filed by authorised dealers to the income-tax department, officials aware of the development said.
The Form 15CC data was being collected and segregated since 2016 and it will be available for analysis from this year, they said.
“A comprehensive review was recommended last year… This will (soon) be made available to field formations for the first time,” a senior official told ET.
The move will help the government to identify cases where the remittance was sent but was not reported by the taxpayer in their filling, the official said. “The whole exercise will curb tax evasion and ensure that legitimate remittances are facilitated while preventing abuse of relaxations in foreign remittance reporting,” the official added. The board will prepare a list of high-risk cases based on scrutiny of data from 2020-21 onwards.
It has directed the field formations to frame a detailed standard operating procedure (SOP) to detect high-risk cases and to submit a list of such cases latest by September 30.
The government has set a deadline of December 31 for sending first notices to those identified as having undeclared income.
Elaborating on the irregularities, the official quoted above said that in one case, an individual with declared annual income of ₹5 lakh is found to have sent ₹15 lakh abroad in the last three years, using three different dealers so that it will not attract mandatory TCS and escape the tax net.
The government collects 20% TCS on foreign remittances of above Rs 7 lakh under the Liberalised Remittance Scheme (LRS), with some exceptions on medical and education expenditure.
Under the foreign remittance reporting through Form 15CC, if the remitter, or deductor, certifies that the remittance is not taxable, no further details are required – for instance, payments by importers, by companies to their subsidiaries, or loans to non-residents.
However, officials said, the department has detected some cases of potential misuse of this relaxation.
“Monitoring these payments where exemption is claimed is crucial to prevent abuse of these relaxations,” said the official quoted above.
The CBDT has already asked banks to report total forex spends as a distinct category, in addition to total credit card spends, even when they are not collecting TCS. This data is being recorded in annual income statement, used to assess the income tax. The government had raised TCS on foreign remittances under LRS to 20% from 5% starting October 1, 2023.
The budget 2023 had also brought international credit card payments under the ambit of LRS and implemented TCS on such transactions. However, it was later rolled back following wide criticism.