The Hindu : Business : `Intelligent' system will track down tax evaders, says Chidambaram

Online edition of India's National Newspaper
Thursday, May 12, 2005

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Business

`Intelligent' system will track down tax evaders, says Chidambaram

Special Correspondent

In certain cases, search and seizures will be resorted to

NEW DELHI: Reiterating the UPA Government's resolve on tax reforms to bring down the rates to ASEAN levels in the years to come, the Union Finance Minister, P. Chidambaram, on Wednesday made it clear that alongside, there would be stricter enforcement to check tax evasion.

In its bid, however, to curb the "interesting business" of tax avoidance and bring in the non-taxpayers into the net, the Government, he said, would improve its tax administration and tend to rely more on "information and intelligence" in the coming days instead of the earlier practice of search and seizures.

Speaking after the launch of the online payment facility for excise duty and service tax here, Mr Chidambaram noted that tax reform was an ongoing process. "In the course of time, it is our endeavour to bring down tax rates to the ASEAN level," he said, while announcing a package of measures for small tax payers and e-payment facilities for the 5,500 large companies so as to further improve tax administration and scale up revenue collections. India, he said, would soon have the best tax rates in the world.

Even though the Government had lived up to its promise of implementing reforms in direct and indirect taxes, the Finance Minister pointed out that there was still a large section engaged in the "interesting business" of tax evasion and avoidance. "If non-tax payers pay taxes, tax rates could be further moderated," he said.

At the same time, unveiling the paradox of moderate taxes and compliance, Mr. Chidambaram noted that the non-taxpayers would be eager to pay their dues only if the administration was "impartial and user-friendly," saying "tax rates must be moderate, tax administration should be user-friendly and enforcement impartial and strict."

Dwelling further on the aspect of impartiality and stricter tax enforcement, Mr. Chidambaram said: "I don't believe in heavy handedness. In certain cases, we have to resort to search and seizures. But it is a thing of past and will be replaced by information gathering and intelligent use of that information."

However, the Finance Minister expressed his utter surprise that in a country as large as India, only 80,000-85,000 individuals disclose income of Rs. 10 lakhs and above. "I am sure the number is much higher than that. Therefore, we must find those who are not paying taxes," he said.

For this purpose, explaining the "intelligent" system that is being put in place, he said the annual information reporting (AIR), the bank cash transaction tax (BCTT) and the tax information network (TIN) would enable the authorities to garner information, use them intelligently and track down the tax evaders.

Mr. Chidambaram said while under AIR, high value transactions would be reported to the tax authorities by the Reserve Bank of India, banks, Securities and Exchange Board of India and property registers, the TIN facility would enable collation of such information vis-a-vis the tax paid by individuals or corporates to find whether there was a case of tax evasion.

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