The next time you shop online or make payment from your debit or credit card at a retail outlet or buy or sell a property, make sure you have filed your income tax return and cleared all dues.

After Central Processing Centres (CPC) for income tax returns and Tax Deducted at Source (TDS), the Income Tax department is planning to set up a third CPC which will identify tax defaulters by gathering information on their spending pattern.

The CPC-compliance management, to be set up in southern India, will act as a data warehouse for all information related to taxpayers. It will capture all high value transactions by using open source data on internet, getting information from other departments, and Annual Information Returns among others.

“For many transactions Permanent Account Number is not required. This will be worked out by this CPC. It is aimed at generating actionable intelligence which will be more focussed and not general. It will use utility business tools to deepen and widen tax base," said an income tax official.

He said a Request for Proposal is being written for setting up the centre. "The tender will be floated soon,” the official added.

The official, who did not wish to be identified, added it would be on the lines of first two CPCs where all capital expenditure would be made by the vendor. For example, in Bangalore CPC Infosys has done all the capital expenditure and the government pays the processing fee per return.

Experts said the move would help widen the tax base by instilling a fear in the minds of tax evaders that the tax department was watching them. The department will also get data from external agencies and sources like internet to identify high risk individuals and do complete profiling of taxpayers.

“To identify non filers or tax evaders, the department can utilise data available from hotels, banks, car sales, mobile phones, jewellery, real estate transactions etc” said Amarpal S Chadha, Partner, EY.

As a pilot for CPC-compliance management project already 33 million non-filers and stop filers have been identified. Notices were sent to 1.2 million such people last year, out of which 5,36,220 filed their returns and paid self assessment tax of Rs 1,018 crore and advance tax of Rs 898 crore. Recently, the I-T department identified another 2.17 million potential non-filers. It has already sent letters to 50,000 potential non-filers in the first batch and more notices will be sent during the year.

“It is a good exercise. The department is not imposing any penalty yet. At times the department’s data is not complete and they are not able to match e-returns with physical returns, but in many cases people are willful defaulters,” said Sudhir Kaushik, Co-Founder & CFO, TaxSpanner.com.

He said data pertaining to people making online purchases, buying expensive items, or buying or selling a property may be captured under this new project.

The massive exercise taken by the tax department to send notices to persons who carried out high value transactions but did not file their income tax returns has aided revenue mop-up from personal income tax, while corporate tax collections have taken a beating due to slowdown.

Earlier the government was also planning to set up centres in Manesar and Pune for processing of bulk income tax returns and digitizing paper returns, but the plans were put on hold due to logistical issues. Currently, there is one CPC in Bengaluru for processing of e-returns and one in Ghaziabad for processing of TDS filings. (Business Standard)