Tax evasion and corruption rumours are rife across India, and the problem is becoming so bad the government is warning everyone to pay their dues – or else.
Collecting duty from manufacturers and firms importing or exporting goods falls to the agency Central Excise, which is a part of the Central Board of Excise and Customs.
Unfortunately, allege many, not all of the money collected ends up in the government’s coffers
Sumit Bose, the country’s Union Revenue Secretary, said: “Anyone not paying the duties they have collected will face the recovery of the duty plus interest and a penalty value of up to 100% of the amount owed. They will also face suspension.
“We will also look at the provisional attachment of property as well as their arrest and prosecution.”
Widening tax gap
Bose highlighted recent comments from India’s Finance Minister P Chidambaram who said foreign investors needed to be reassured that India had a stable tax regime, clear tax laws and a fair tax administration if they were to create jobs and growth in the country.
He added: “While we are doing our best to help trade and industry there are still taxpayers and assessors who are not complying with the law and not paying their tax in a timely manner.”
Bose also suggested unregistered assessors removing goods for tax owed and others who do not forward the taxes they collect.
Other issues include India’s widening tax gap as many businesses liable to pay duties haven’t registered and more than half who have signed up have failed to file tax returns.
Bose said: “We have collected information about those service providers who are collecting taxes but are not depositing the money with the government.
Threat of prosecution
“We have also seen some importers and exporters are either under-invoicing in exports or mis-declaring the goods concerned to evade customs duty. Others are misusing the exemptions and incentive schemes.”
Indian Customs uses a self-assessment system that releases 70% of consignments for without inspection by customs.
Bose added: “Because of this it is important that importers and exporters pay their correct duty liability.
“If they do not do so they will have to face the legal consequences, including arrest and prosecution as well as paying the amount of duty, plus interest and a fine.
“Using technology, it isn’t difficult for tax authorities to find who is evading tax and duties and we will reach the doors of those who are evading payment.”
