The Central Board of Direct Taxes (CBDT) Thursday said it “does not have any word ‘Stop Filers’ in its glossary and it does not maintain any database of ‘Stop Filers’ in normal course”.
This was in response to the April 4 report “88 lakh taxpayers didn’t file returns in a year of note ban, 10-fold jump over previous year” published. The spike in the number of “stop filers” in the financial year 2016-17 reversed a four-year trend, the report said.
Stop filers are individuals who filed returns in earlier years but did not do so in the current year even though they are liable to do so.
Officials said that this surge, in the year of demonetisation, could be attributed to the loss of jobs, falling income and low economic activity.
In its press statement, CBDT said, “CBDT also wishes to make it very clear that the information about ‘Stop Filers’ is incorrect and the data source quoted is not from the Income Tax Department.”
The CBDT’s statement doesn’t match with facts.
For one, the data on stop-filers was obtained by The Indian Express from sources in the Income Tax Department.
Two, a memo of CBDT itself, dated April 22, 2016, clearly refers to “stop-filer/non-filer” as one of the “commonly used terms relating to direct tax administration”.
That’s not all.
The term “stop filers” has also been used in various internal discussions and even in reports submitted to Parliament.
For instance, the Fifty-Second Report of the Standing Committee on Finance (2017-18) presented to the Lok Sabha on December 20, 2017, refers to a new regime (Statement of Financial Transaction) that “would help achieve multiple benefits of widening of tax base through identification of new taxpayers, non-filers and stop-filers, curb tax evasion.”
According to sources in the tax department, the number of “stop-filers” is computed as per the following steps:
1. Number of taxpayers at the beginning of the year
2. Number of new taxpayers added during the year
3. Number of taxpayers ‘dropped’ out of (1) above
4. Total number of taxpayers for the year: 1+2-3
5. Number of persons from (4) above, who have filed their tax returns
6. Number of persons who have not filed their returns (‘stop-filers’) (4-5)
The figures relating to TDS deductees who have not filed their returns are not taken into consideration while calculating the number of stop filers.
The CBDT mentions figures for “Dropped Filers” — 28.3 lakh for 2016-17. This is defined as a person who was in the filer base but has not filed returns in the last three years.