The Income Tax Separtment has a new weapon in its arsenal to identify evaders — the database of the Credit Information Bureau of India.
Set up by the State Bank of India along with several other banks and non-banking finance companies, the credit information bureau maintains records of individual payments pertaining to loans and credits.
The IT department will now use the bureau’s extensive database for high value recoveries from tax evaders. The credit information bureau will help the IT department recover a part of the Rs 478,863 crore tax that various entities owe the Department. The funds are locked up in disputes and litigations.
The Central Board of Direct Taxes, in its internal document called Central Action Plan for fiscal 2012-13, has reiterated the importance of the credit information bureau in the recovery process and has said it is one of the means to enforce recovery from defaulters.
CIBIL’s database contains PAN-wise records of loans taken by entities from banks and financial institutions. CIBIL also assigns credit scores to borrowers depending on factors like repayment pattern, defaults and loans availed by them.
Using the CIBIL database would help the IT department to move effectively given the extensive details of loans and credit taken by different entities. Since the CIBIL database also contains information about the credit rating of such entities, this would also help in ascertaining the financial capability of the PAN holders against whom the tax demand has been raised by the Department.