Tax Defaulters Beware!

With tax recovery to the tune of more than Rs 1 lakh crore (Rs 1 trillion) held up for lack of information about the whereabouts of defaulters, the Income Tax department is working on plans to publish their names in newspapers.

The problem has been further compounded with several of the tax defaulters having created 'benami' assets to escape the dragnet.

The I-T department is embarking on this 'out of box solution' of bringing the names of tax defaulters in public domain in a bid to expose them.

The department, according to the official proposal, will publish in newspapers the names of those defaulting assessees who are either not traceable or whose assets are not identifiable.

According to the latest data of the I-T department, out of a total outstanding arrear demand of Rs 2,29,032 crore (Rs 2,290.32 billion) till March 2010, an amount of Rs 9,476 crore (Rs 94.76 billion) is unrealized or held up as the assessee is 'not traceable' while Rs 92,360 crore (Rs 923.6 billion) is stuck as there are 'no assets'.

Important deliberations, including this issue, discussed during the conference are subsequently taken forward and implemented as policy issues by the I-T department.
"The proposal will be implemented after weighing all the pros and cons about the scheme and studying the prevalent practises in other tax systems about such issues across the world," a senior I-T officer said.

The department is also planning to give wide publicity to its scheme of tapping and encouraging 'informants' to unearth tax evasion and gain tip-off on the whereabouts of absconders who have evaded huge taxes.

Source: http://www.rediff.com/business
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India – A tax haven?

Infrastructure investment and social sector programmes have so far been the interests of the two UPA Governments to increase spending.

This is entirely understandable, given the glaring deficiencies in both areas; but from the perspective of fiscal rectitude, there is the affordability question to be considered.

If things go to plan, the reduction of the ratio proposed by the Finance Commission for 2014-15 will be achieved next year -- three years ahead of target. But the task of fiscal correction has barely begun.

Sources reveal that the revenue foregone last year on account of tax concessions and incentives was Rs 79,554 crore (Rs 795.54 billion) on corporate income tax -- mainly accelerated depreciation, software technology parks, etc. --  and on personal income tax a further Rs 36,186 crore (Rs 361.86 billion) -- mostly long-term savings.

Excise concessions cost Rs 170,765 crore (Rs 1,707.65 billion), while customs concessions had the biggest bill: Rs 2,02,240 crore (Rs 2,022.40 billion).
The total bill -- Rs 4.89 lakh crore (Rs 4.89 trillion) -- was nearly 80 per cent of the tax collection in 2009-10!

The peak income tax, for both companies and individuals, could then be no more than 22%. That would make India a tax haven and there would be much less incentive to take money out of the country; if the incentives work, tax revenue would actually climb as people report incomes more honestly.

Sources also reveal the second transition waiting to be achieved is on the subsidy front. The central subsidy bill, mostly on food, oil-related products and fertiliser, is slated to be Rs 1,43,570 crore (Rs 1,435.70 billion) next year.

The Economic Survey cites research, which suggests that between 40% and 55 % of foodgrain meant for the poor is pilfered.

Taking the budgets for all these, every one of about 50 million families that are below the poverty line could be given Rs 3,000 every month as a cash transfer -- better than what NREG offers, and enough to bring all of them above the poverty line, at no extra cost to the government.

India could be transformed into a tax haven, and a land without absolute poverty. Both dreams can become reality if managed and with the help of our Finance Minister considering the growth of the poor and the disabled.

Source: http://www.rediff.com/business

Advise for the Wise - March'11!

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