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 the Central Action Plan (CAP) for the fiscal year 2024-25, charting a roadmap for the Income Tax Department as India approaches the centenary of its independence in 2047.

CAP 2024-25 calls for quick resolution of high-priority tax demand cases, identification of above ₹2 lakh cash transactions at high-risk sectors like hotels and luxury retailers and widening of the tax base.

The CBDT has identified the top 5,000 tax arrear cases, which constitute approximately 60 per cent of the total outstanding tax demand of over ₹43 lakh crore.

To address these high-priority cases, the CBDT CAP has recommended to form a special team in each Principal Chief Commissioner of Income Tax (Pr.CCIT) zone. These teams, led by the Principal Commissioner of Income Tax (Pr.CIT), are tasked with conducting 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.

In a bid to widen the tax base, the CAP emphasizes expanding the taxpayer base and encouraging voluntary compliance. The plan calls for the identification of high-risk sectors–such as hotels, luxury retailers, and medical facilities–that frequently circumvent reporting requirements for cash transactions exceeding ₹2 lakhs.

To combat this, the CBDT has mandated the implementation of a verification process to scrutinize high-value consumption expenditures and ensure accurate reporting.

The CAP highlights the need for stringent compliance with Section 139A of the Income Tax 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, the CAP 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 deadline of September 30, 2024, for identifying such authorities, with a goal of achieving 100 per cent PAN validation by March 31, 2025.

The CAP 2024-25 is structured into 19 chapters, each addressing key areas such as budget target allocation, reduction of arrear demand, litigation management, service delivery standards, and redressal of grievances.

The action plan 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 finalized at least one month before the limitation date. 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.

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.