How does the Gov find out about tax evasion

I'm a salaried person. But I wanna know, if somebody does not declare a particular income, how does the gov find out ? Are all the financial transcations logged against one's PAN. ( is India so advanced ? ). My friend once sold his shares and made a profit of 10K. He simple forgot to declare his profit, but nothing happened to him !

Till a few years back, there were very few tools available with the government to find out about the incomes or expenses which were not declared. The favourite methods were search & seizure, survey, assessment enquiries etc. But with the advent of technology, 6-in-1 scheme, annual information report, mandatory quoting of PAN for different transactions,etc. are making a lot of information available to the government and it's started using it as well. Like in the previous year, all those persons whose telephone usage in any particular month of the year was greater than Rs. 1000 were send SMS to compulsorily file the Income Tax Return. In coming times, the incidences as quoted by you will be numbered.

Best Regards,

hmmm...I was told that only about 5cr people in India pay income tax. Thats is a very small number when compared 100cr. Wonder...whats the govt doing for 95cr people/

Are you going to tax even the 36% below poverty line? Then, a very high proportion of rural india has very meager income. Thereafter, the agriculturists don't have to pay taxes. So, the population eligible for Income Tax burden is much lesser than 100%.

The government is moving in the right direction, i.e., looking for expenditures than incomes and that will certainly improve the no. of people paying taxes.

Best Regards,
--Ashish

Other ways :
-scrutiny by IT Deptt of assessees' accounts at random (have u ever gone thru this experience ?)
- large cash purchases


Of course some people are 'exempt' from such intrusive assessment . such as :
- Lalu /Jaya etc
- Medium ranked cops in Blore (they roll not in crores, but in scores of crores)
- Cricketers, specially highly ranked ones who even manage waiver of customs
- Some filmy folk

Dont u understand... its the common man who bears the most burden , and suffers the most questioning

AGILENT

There is no Question of taxing people below the poverty line. They are supposed to way below the IT limit. But 5cr/100cr is very suprising. I'm sure, there are people who evade paying tax, if these guys start paying up their dues..everybody will benifit. Also, illegal income stored outside india...runs into billions of dollars. The Govt needs do something about it.
Your right...govt should look at expenditures based tax, but our politicians will make sure that they are not affected by it.

Well, before the government talks about widening the tax net, it needs to talk about what efforts it's put to make sure that the revenue generated by tax and other collections are being used towards public welfare without any lekage,pilferage and wastage. One of our PMs said that only 15% of the allocated money is really spent. I believe over the years this %age must have been fallen to 10. More benefits can be reaped if the government is able to efficiently manage the money it receives than from garnering much more taxes which will eventually end up feeding a corrupt, in-efficient white elephant.

Tax rates in India are very high when we compare them to other Nations in Asia. Today an individual is paying as high as 55% of his income as tax to the government. (30% as Income Tax and 35% of expenditure as indirect taxes).
As the government is not able to properly use the money it recieves, it is not able to reduce the tax rates and till the time tax rates are reduced, evasion will continue. Why the people should suffer for deficiencies in the administrative system??

That is a good way to evade tax. All politicians and film stars do agriculture.

Examples are Jay & Veeru.

You are right. Government officials too.