FM warns chronic defaulters of service tax

Fifteen years after tax was introduced large number of service providers are not filing their returns or many have stopped filing

The Union Finance Minister P Chidambaram today warned that the gaze of tax department will fall on sectors that are chronic defaulters of service tax. He also said chronic service tax evasion has been identified and asked non-filers of returns to come clean before December 31, 2013.

In an interactive session on Voluntary Compliance Encouragement Scheme (VCES)-2013 at Chennai on Saturday, the Union Finance Minister mentioned that the sectors including renting of immovable property, construction, IT, real estate, mining, advertisement, storage and warehouses where chronic service tax evasion has been identified.

“The gaze of the department will fall on these sectors,” said Chidamabram, while warning that the Government got “immense” data and sources to profile a person’s tax record.

The Finance Minister noted out of around 17 lakh, who were registered for payment of service tax, only seven lakh pay the tax and the balance do not pay. He urged the non-filers of service tax returns to take advantage of Scheme that waives interest and other penalties. “Out of the 10 lakh few might have gone under the threshold limit of service tax bracket,” he said.

Praveen Mahajan, chairperson, Central Board of Excise and Customs noted that the Government is targeting service tax revenue of Rs 180,141 crore this fiscal, as compared to Rs 132,498 crore collected, a year ago.

Meanwhile, Chidambaram said, ten people were already arrested across the country for not depositing the service tax they collected from clients and were using the money for their own purposes. In each case, they had retained more than Rs 50 lakh, he noted.

He added, the government has great deal of information and it has dossiers on economic offenders. “It is due to the limitation of the tax department they are not being reached,” said Chidambaram.

Fifteen years after the tax was introduced large number of service providers are not filing their returns and many have stopped filing. The tax to GDP ratio and the tax payer base in India is one of the lowest in the world, said the Finance Minister.