Pay tax on time and the CBDT will reward you handsomely

In the last three years, the central government in India has come up with many different ways to nab the tax invaders. The different schemes announced to encourage the non-tax payers to join the mainstream economy has worked well and there is a hike of approx 20 million taxpayers in the last couple of years. In 2016, when the deadline for declaring any hidden assets was near, the CBDT noticed a huge hike in the number of taxpayers. Additionally, demonetization and GST played an important role in bringing more people to the direct taxation system.

A jump in “direct taxpayers”

As the income is increasing from direct tax, it is also important to reward those who have been loyal taxpayers for a long period of time without any default. Last year, the IT department sent appreciation letters but this year it was abruptly stopped as it seems to make no major difference. However, the Central Board of Direct Taxes has come up with a new plan under which the loyal taxpayers will be rewarded in form of additional refunds.

Reward program may be on its way

During the recent meeting with the finance department, according to the sources, CBDT has discussed a plan to reward those taxpayers who are filing their returns without any default. Based on the tax slab the taxpayer is in, the suggest rewards varies between 1% to 5% give or take. According to the sources, the IT department will pick the taxpayers from different jurisdictions and will reward them with the 1% to 5% of the tax paid. However, if they default in future, the amount will be deducted from the refund claimed with interest.

This process will help in encouraging the taxpayers to keep the books properly and pay taxes in time. Such reward programs are already working perfectly in many developed countries like the US, UK, and Canada. As per the CBDT, the number of taxpayers has now touched 62.6 million from the previous 30-40 million. According to the sources, in the beginning, the number of such taxpayers will be low and will only cost a few lakhs in rewards.