The communication, dated June 16, a copy of which was seen by ET, also mandated each zone to submit a report to the Directorate of Tax Research and Analysis by July 31.
“The idea is to identify risks early, engage with large taxpayers proactively and ensure that tax payments are aligned with actual income trends,” said a senior official, who did not wish to be identified.
Direct tax collection increased more than 15% year-on-year in the first quarter despite the disruption caused by the West Asia crisis. Direct tax collection, net of refunds, increased 14.64% year on year to ₹5.21 lakh crore as of June 17, while corporate tax collection went up 22%, supported by strong advance tax inflows on account of improvement in corporate earnings in the first quarter of the fiscal.
Advance tax collection for the first quarter increased 15.30% year-on-year to ₹1.78 lakh crore.
Officials, however, fear pressure from elevated refund claims and uneven earnings growth across sectors. The proposed sector-specific analysis would help distinguish between cyclical business factors and compliance-related issues, said the official cited earlier.
As per the directive, each tax zone has to list prominent taxpayers sector-wise, look for any potential deviation in the tax collection trend and reach out to them to find underlying reasons in case of any sector-specific slowdown in tax collection.
A key focus of the exercise would be advance tax payments, the official said, adding that officials have been instructed to maintain close engagement with major taxpayers and encourage them to reassess their advance tax liabilities. The findings are expected to help authorities take corrective measures and improve compliance. This will also help the department in early detection of defaults, any major deviation from last year’s filing and early detection of non-filers, the official said.