The government is tightening scrutiny norms in order to widen the tax base. It is has now become compulsory for firms, not under the Companies Act, to file their income tax returns even if they are exempt from tax.

Further, the banks will now be required to furnish details on interest accruing on deposits even if the interest is less than Rs 5,000 and not liable to tax deducted at source, a finance ministry official said on Tuesday.

"Companies will now have to give us the details of their gross income and not just their net total income. So far, investments undertaken in tax deductible instruments were netted from the gross income and this break-up was given to tax authorities. Now they will be required to give us the details of their gross income," Bulbul Sen, joint secretary, Central Board of Direct Taxes said addressing a Budget seminar organised by global consultants KPMG.

Sen said the depreciation rates were reduced as it was found that companies were having a surplus in their internal accounts owing to the provision of a higher depreciation.

According to Sen, the logic behind imposing a 0.1 per cent tax on every cash withdrawal of Rs 10,000 per day was to spread the tax burden thin and to put in place an audit trail.

"Several companies claim to be bankrupt and go to the Board for Industrial and Financial Reconstruction. Yet, in come cases, the promoters of these companies continue to lead a lavish lifestyle. We are, through this measure, trying to tax those who are not coming into the ambit of tax liability," she said.

She pointed out that there was a steady increase in the amount of black money in the economy.

"The National Institute of Public Finance and Policy had projected that black money in the 1970's accounted for 15-18 per cent of the GDP, which increased to 18-21 per cent in the 80's, 35 per cent of GDP in the 90's, and 40 per cent of the GDP in the late 90's. Going by this trend, the black money component would have outgrown the white money component of the economy by now," she said.

Getting more vigilant

• It is has now become compulsory for firms, not under the Companies Act, to file their income tax returns even if they are exempt from tax
• Further, banks will now be required to furnish details about all interest accruing on deposits even if the interest is less than Rs 5,000 and not liable to tax deducted at source
• Depreciation rates have also been reduced as it had been found that companies are having a surplus in their internal accounts because of the provision of higher depreciation
• The logic behind imposing a 0.1 per cent tax on every cash withdrawal of Rs 10,000 per day is to thinly spread the tax burden while also putting in place an audit trail