What is Income Tax Raid?

The Income Tax Department of India (ITD) is the apex executive agency responsible for the collection of direct taxes. It functions under the Department of Revenue of the Ministry of Finance and is headed by the Central Board of Direct Taxes (CBDT). The primary function of ITD is to collect income tax and enforce various direct tax laws such as Benami Transactions (Prohibition Act) Act, 1988 and the Black Money Act, 2015.

Combating tax avoidance and tax evasion is one of the key practices conducted by the ITD on a regular basis. The official search operation undertaken by the ITD is termed as an income tax raid. An income tax raid is the most effective method to curb and seize illegal wealth/black money hoarded by an individual or company.

• Personal Finance | Tax | How To Calculate Gratuity For Private Sector Employees | Dharani Telangana

An income tax raid is generally conducted by a team of income tax officers accompanied by the police. The officers are bestowed with the following powers:

1. Search and Seizure - Any building or place where unaccounted money is kept or stored. This can include books of account, financial documents, money, bullion, jewelry or other valuable article or thing.
2. Break bank locker, safes and other systems, if required.
3. Personal investigation of an individual who is a listed suspect or primarily accused.
4. Seize all illegal and unaccounted assets and money.
5. Create an inventory of valuables seized/found during the raid.
6. Place marks of identification/make copies of books, accounts and other relevant documents.

The following assets cannot be seized by the income tax officials:

1. Stocks of a business
2. Assets/cash disclosed to the ITD.
3. Assets declared in books of account
4. Cash which is duly explained.
5. Jewelry provided in wealth tax return.
6. Gold - Up to 500 grams for each married lady, 250 grams for each unmarried woman and 100 grams for each male member.

An individual has the following duties after an income tax raid:

1. A suspect/accused has the right to make copies of the documents seized by the income tax officer. The copies have to be made in the presence of an income tax officer.

1. An individual can file a petition before the High Court in case he/she feels that the raid conducted by the ITD was unlawful/unfair. They can also challenge a raid and appeal before the commissioner of Income Tax (Appeal).