This document summarizes the Indian government's measures to combat tax evasion within central tax agencies, as outlined in response to Lok Sabha Unstarred Question No. 3662 on August 11, 2025.
Regarding direct taxes, the Central Board of Direct Taxes (CBDT) utilizes Computer Aided Scrutiny Selection (CASS) and a Risk Management Strategy to select cases for scrutiny/assessment. These risk rules are automatically implemented in an identity-blind manner. The Income Tax Department addresses tax evasion through various actions permitted under the Income-tax Act, 1961, including verification campaigns, NUDGE campaigns, search and seizure operations, and prosecution.
For indirect taxes, the Directorate General of Risk Management and Analytics (DGARM) under the Central Board of Indirect Taxes and Customs (CBIC) employs a risk management system to select taxpayers for Goods and Services Tax (GST) and Customs audits. Taxpayer selection for audit prioritizes risk to revenue assessment, focusing on high-risk taxpayers. The audit list generation is system-driven, eliminating direct taxpayer interaction. The Directorate General of Audit provides the Audit Plan, and DGARM officers then create audit lists for each Financial Year, organized by Audit Commissionerate.
The response clarifies that the Lokpal of India and the Central Vigilance Commission (CVC) already function as independent anti-corruption bodies overseeing central tax agencies.
Key Entities Referenced
Ministry of Finance: A ministry of the Government of India responsible for financial matters.
LOK SABHA: The lower house of the Parliament of India.
SHRI PARSHOTTAMBHAI RUPALA: A member of parliament who raised the question regarding anticorruption measures for central tax agencies.
SHRI PANKAJ CHAUDHARY: Minister of State in the Ministry of Finance who provided the answer to the question.
CBDT: Central Board of Direct Taxes, responsible for formulating Risk Management Strategy for scrutiny assessment.
Income-tax Act, 1961: The primary law governing income tax in India.
CBIC: Central Board of Indirect Taxes and Customs. Oversees the Directorate General of Risk Management and Analytics (DGARM).
Directorate General of Risk Management and Analytics DGARM: An organization under the CBIC that puts in place a risk management system for selecting taxpayers for audit purposes.
Government of India
Ministry of Finance
Department of Revenue
LOK SABHA
UNSTARRED QUESTION NO. 3662
TO BE ANSWERED ON MONDAY, AUGUST 11, 2025/SRAVANA 20, 1947 (SAKA)
ANTI-CORRUPTION BODY FOR CENTRAL TAX AGENCIES
3662. SHRI PARSHOTTAMBHAI RUPALA:
Will the Minister of FINANCE be please to state:
(a) the measures implemented by the Government to reduce tax evasions via continuous tax audits;
(b) whether the Government proposes to select audit cases by employing risk management techniques
which will be examined by a dedicated team to minimise the potential for corruption, if so, the details
thereof; and
(c) the action taken/to be taken by the Government to establish an independent anti-corruption body
for central tax agencies, if so, the details thereof?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) and (b) : In case of direct taxes, cases are selected for scrutiny/assessment by Assessing
Officers on the basis of approved risk rules under Computer Aided Scrutiny Selection
(CASS) and Risk Management Strategy, formulated by CBDT. Such risk rules are machine
implemented and executed in an identity blind manner. Investigation regarding tax evasion is
an ongoing process and whenever any instance of tax evasion comes to notice, the Income
Tax Department takes appropriate actions including conducting e-verification campaigns,
NUDGE (Non-intrusive Usage of Data to Guide and Enable) taxpayers campaigns, search &
seizure, surveys, reopening of cases, assessment of income, levy & recovery of tax,
imposition of penalty, launching of prosecution etc. as per the provision of the Income-tax
Act, 1961.
In case of indirect taxes, the tax audits under GST and Customs are a regular exercise. An
annual Audit Plan containing a list of taxpayers to be audited is issued every financial year.
The Directorate General of Risk Management and Analytics (DGARM) under the CBIC has
put in place a robust risk management system for selecting taxpayers for audit purposes for
each financial year. To curb tax evasion via continuous tax audits, the selection of taxpayers
for audit is done based on risk parameters and local risk perception. The audit selection is
prioritized on risk to revenue assessment and thus more high-risk taxpayers are taken up for
audit. The list of taxpayers to be audited is system generated without any interface with the
taxpayers. Based on the Audit Plan, provided by the Directorate General of Audit, DGARM
officers prepare the Audit lists Audit Commissionerate-wise for each Financial Year.
(c) The Hon’ble Lokpal of India and Central Vigilance Commission (CVC) already exist as
independent anti-corruption bodies for Central Tax Agencies.
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