Only seven lakh pay service tax, says Finance Minister

Chennai has chronic tax defaulters

Chennai:

Only seven lakh of the 17 lakh registered service tax-payers pay tax to the government and the Union Finance Ministry is contemplating on taking serious action against those evading taxes after December 31, 2013.

This comes in the wake of government targeting service tax revenue of Rs.1.80 lakh crore this fiscal up from Rs.1.32 lakh crore collected last year.

Speaking at an interactive session on Voluntary Compliance Encouragement Scheme (VCES)-2013, Union Finance Minister P Chidambaram said that it has also arrested 10 persons till now for failing to pay services taxes to the government.

“These 10 persons have collected service tax but not paid service tax of more than Rs 50 lakh to the government. They did not remit the same to the government but were using the money for their own purposes,” Chidambaram said.

The minister said that in Chennai the major chronic tax evasion has been by immovable property renters, work contract service and  maintenance and repair sector etc. In other cities, the tax evasion has been in consultancy, IT, security service, advertising, real estate, transport operators, manpower recruiters etc who don’t pay taxes.

He warned that the gaze of income tax department will fall on these sectors and urged the no-filers to come clean before December 31, 2013.

He said that government has dossiers on economic offenders. It is due to the limitation of the tax department they are not being reached. “After December 31, you can get away for few weeks but law will catch up with people who have evaded tax,” he added.

 The minister also recalled that it has been 15 years since the service tax was implemented.  He said that there is a large number of no-filers of tax and the number could be higher than the registered 17 lakh. “The number of service providers has grown but the department is not able to keep pace with it,” he added.

Chidambaram said the tax: GDP (gross domestic product) ratio and the tax payer base in India is one of the lowest in the world.