CBDT Increases Scrutiny On Top Advance Tax Payers

The Central Board of Direct Taxes (CBDT)has directed income tax officials to strictly keep a watch on advance tax payers in order to identify bogus claims of exemptions and deductions.

As a part of its enhanced tax collection strategy, the CBDT has stressed on the reassessment of advance tax liabilities by top taxpayers; both individuals and companies. The IT Department has also been instructed to address incorrect or fraudulent claims that result in loss of revenue.

Advance tax, as the name implies, is a form of tax paid in installments during a financial year in order to reduce the lump-sum burden that taxpayers have to face at the end of the year and also to ensure improvement in government’s cash flow.

In its issued Central Action Plan (CAP) for 2025-26, the authorised body responsible for policy-making for direct taxes, aims to plug revenue leaks and enhance its collections. The CAP suggests profiling districts or regions depending on their net positive or negative revenues and taking corrective actions where tax collections have declined.

According to a Senior tax official, “A special emphasis is being placed on collecting arrears and current dues, with strict action against non-compliant taxpayers.” He further added that this body is also encouraging taxpayers to switch to the new tax regime, as it allows no deductions or exemptions to curb misuse.

For FY 2025-26, the tax officials are entrusted with a target of achieving a tax collection mark of ₹25.20 lakh crore. According to the tax officials, the tax collection target includes ₹10.82 lakh crore from corporate tax, ₹13.60 lakh crore from non-corporate taxes (including personal income tax), and ₹78,000 crore from the securities transaction tax (STT).

The government as well as the concerned authorities are taking such efforts to reduce tax burden on those individual taxpayers or entities which often pay their taxes honestly and to figure out those who don’t take their tax liabilities seriously and take false or illegitimate ways to escape from their tax obligations. Identifying the big advance taxpaying entities which are taking help of fraudulent activities to misfile their advance tax, can help the tax collecting authorities to significantly make the tax landscape better and fairer along with increasing tax revenue from those who must file it.

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