Crackdown against service tax evasion imminent, thunders P. Chidambaram even as he invokes god

Written by PTI | Chennai | Updated: Nov 10 2013, 06:49am hrs
P ChidambaramYou are honest while you are dealing with your spouse, children. Why should you be not honest with the tax department, asks P. Chidambaram. PTI
Union Finance Minister P Chidambaram today said government would 'very closely' focus on sectors prone to chronic service tax evasion like IT, real estate and consultancy.

He said he had noticed chronic tax evasion in various cities (like Chennai) in contract service, maintenance and repair service and sectors like consultancy, IT, real estate, mining, transport operators, advertisement, storage and warehouse, manpower and recruitment and security services.

Chidambaram said he believed this was true all over the country. There was no reason to believe that if one sector was not paying the tax in Kolkata, that sector would be more compliant in Chennai, he said.

"Those who are in these sectors must remember that the (Finance) Department will have a closer look. These are the tax evasion prone sectors. We are going to look at these sectors very, very closely", he said.

Chidambaram was speaking at an interactive meet on Trade and Industry, Service Associations and Chambers of Commerce and Industry on Voluntary Compliance Encouragement Scheme (VCES).

Referring to the scheme, he said it was one of the most generous and fair packages offered by the Government.

"I am assuming everyone is a honest citizen.You are honest in most actions. When you make a vow before your favourite deity, you are honest. You go and carry out the vow. You are honest while you are dealing with your spouse, children. Why should you be not honest with the tax department", he asked.

Urging members to pay the taxes, he said non payment might be out of ignorance or financial pressure. Taxes may have been paid over a period of time or completely stopped.

"All that is being washed away by this scheme. The past will be completely closed".

"No questions will be asked. You should file your declaration, pay taxes in the current period and you will not be obliged to pay any interest, any penalty or face any prosecution", he said.

VCES had been introduced with effect from May 10, 2013 as a one time amnesty scheme for paying service tax dues for the period October 1, 2007 to December 31, 2012 without interest and penalty.

Minister said the power of "arrest" was used only in cases where an individual had collected Rs 50 lakh and above and does not deposit it in government account.

"Tell me should such a person, be shown any sympathy The money is not a small amount. He is keeping the money and using it. It is an interest free loan from the government," P. Chidambaram said.

"We have 360 degree profiles of worst economic offenders. We have dossiers on the worst economic offenders. Because of limitations in the department, we cannot reach to every offender. That does not mean we do not know that there are no offenders," he said.

"Ultimately, we will reach the offenders. But, I do not want any one of you to be offenders. I want you all to be honest citizens, honest tax payers. We are here to help you. Whenever I have been in charge of this department, we have been successful in raising revenues for the Government", P. Chidambaram said.

Stating that 17 lakh people had voluntarily registered for filing their service taxes, he said only seven lakh actually pay their taxes.

"So, ten lakhs (people) do not pay... Therefore, we have said in the budget that we will reach out to these 10 lakhs. We will give them an opportunity. A fair opportunity. A generous package and let them come forward. At the end of this exercise, I hope a vast majority of the 17 lakh will become tax payers", P. Chidambaram said.