New Delhi: In a move aimed at cracking down on loan defaulters, the income tax department will now share information with state-run banks about immovable properties held by defaulters and their guarantors to enable their confiscation.
In an order dated 25 June, the tax department held that sharing of this information is in “public interest”.
The stress on information sharing comes at a time when there has been a sharp increase in wilful defaulters even as the level of bad debts for banks is coming down with better recoveries under the insolvency and bankruptcy code.
Data available with the government showed that the number of wilful defaulters — or individuals who default on a loan repayment despite having the capacity to repay — owing money to state-run banks rose 14 per cent to 8,582 in 2018-19 from 7,535 in 2017-18.
Besides details of assets, other particulars such as bank account information, sundry debtors of the loan defaulters can also be furnished by the tax department to help in the loan recovery by the bank, the order said.
‘Public interest’
The income tax return forms mandate individuals and Hindu undivided families with incomes of more than Rs 50 lakh to disclose their assets and liabilities.
On Tuesday, the Central Board of Direct Taxes directed its principal chief commissioners of income tax to disclose this information to state-run banks under section 138 (1) (b) of the Income Tax Act, 1961, upon authorisation.
The section empowers tax department officials to disclose information available with it if the disclosure is in public interest.
“The board is of the view that sharing of information with PSBs (public sector banks) in respect of assets held by defaulters of loans, so as to enable recovery of loans from such defaulters, is in public interest and hence, can be furnished,” the order said.
To be sure, the income tax department already shares information with other government agencies.
‘Will be done with caution’
Amit Maheshwari, managing partner at Ashok Maheshwary and Associates LLP, said the particular section of the Income Tax Act empowers the tax department to share information available with it but pointed out that “obviously it will be done with caution”.
“This directive will only aid the public sector banks in their recovery efforts and not the private sector lenders,” he said.
Maheshwari added that “several defaulters may have already shifted their assets and may not hold significant assets in their name. Also, the information can be provided only in respect of mortgager/guarantor and borrowers only and not their relatives”.
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Yes! Finally someone writes about bandar bola.