Beware: Earn more than Rs 5 lakh interest from FDs but don't pay tax? Taxman is watching

The Income Tax Department is preparing to track thousands of individuals who earn high-interest incomes from fixed deposits (FDs) but do not include the amount in their taxable income, according to report in the Times of India.

Surveillance will be on individuals, including senior citizens, having interest income of Rs 5 lakh and above who do not pay tax on the interest income. It will be based on data collected from various agencies (such as banks) on taxpayers as well as tax deductions on FDs, senior officers in the Central Board of Direct Taxes (CBDT) told the paper.

There has been a rise in the earnings based on income from interests received on large fixed deposits as it is considered to be a more durable source of income.

Sources told the ToI that most of the individuals who fall in the 10 percent bracket pay their taxes. However, individuals falling in the 30 percent bracket often fail to pay their taxes.

"Our focus is on the large evaders. There is no point chasing the smaller persons who do not yield much returns," a top-ranking officer told the paper.

According to the report, the department will also track professionals who receive their payments in cash and do not disclose the actual income amount in their annual statements.

Earlier, the I-T Department initiated steps to weed out individuals who bought property with suspected benami money for never having filed their income taxes.

Apart from helping the government crack down on black money, the move will help I-T department achieve its set goal to raise Rs 9.8 lakh crore from direct taxes in the current fiscal year as well as expanding its tax base.