Encouraged by about 1,400 filings by businesses seeking amnesty for service tax defaults under a scheme announced earlier this year, finance minister P Chidambaram on Thursday launched a massive campaign to persuade more defaulters to come clean and avoid any punitive action.
Chidambaram said the defaulters who have made the filings have declared dues of about R650 crore, half of which has to be paid before December 31. The minister said he expected a big response to the campaign considering the average declaration of default even before the campaign started works out to R50 lakh per filing. About 65% of India’s $1.8-trillion economy accounts for services and about 10 lakh of the total 17 lakh registered service taxpayers have stopped filing returns.
Chidambaram asked defaulters to take advantage of the voluntary compliance scheme or face punishment. One cannot collect money which is government’s and keep it with oneself as if it was some kind of working capital, he said.
“Pay your service tax…this is an opportunity to put the past behind you and come clean,” the minister said while launching the Voluntary Compliance Encouragement Scheme campaign, which will run up to December 31, 2013.
About 10 lakh non-filers or stop filers of service tax are in a way defaulters and they are liable to punishment, the minister said. Those who have collected service tax in excess of R50 lakh and not deposited to the government face punishment of imprisonment up to 7 years.
Under the amnesty scheme, the revenue department expects to collect taxes without interest and penalty mainly from restaurateurs, rent-a-cab service providers and those offering services to construction, infrastructure and mineral exploration industries under work contracts. These are businesses where non-payment to the exchequer of the 12.36% tax collected from service recipients is most rampant. Supply of manpower is another service where the offence is widespread.