Income Tax: The Income Tax Department has placed hotels, hospitals, and IVF clinics that engage in cash transactions to evade taxes under close scrutiny. The Central Board of Direct Taxes (CBDT) has directed the tax authorities to investigate these establishments, which have been reportedly avoiding digital transactions in favor of cash to circumvent tax obligations.
The CBDT has issued a cautionary note to the Income Tax Department, advising them to conduct these investigations without unnecessary interference that could disrupt the operations of these businesses. This directive comes after the CBDT received numerous complaints indicating that many hotels, hospitals, luxury brands, and IVF clinics have been using cash transactions as a means to evade taxes.
Hotels and Hospitals Failing to Report Cash Transactions
According to subject matter expert Archit Gupta, financial regulations require reporting of cash transactions exceeding ₹2 lakh through the Statement of Financial Transactions (SFT). However, many of these establishments have been neglecting this requirement. Sandeep Agrawal, Joint Secretary of the All India Federation of Tax Practitioners, mentioned that the CBDT has specifically targeted high-value businesses. Under this action plan, these entities will be closely monitored, and the Income Tax Department may initiate recovery proceedings.
This crackdown is part of a broader effort by the government to curb tax evasion and ensure compliance with financial regulations, especially in sectors known for handling large volumes of cash transactions.
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