CAG asks ITD to identify probable tax evasion

The CAG has made this specific directive after conducting a study to find out whether the IT department is geared to meet the new challenges in international taxation owing to globalization and the attendant complexity in transactions. The scope of CAG study also aimed at finding out whether the systems and control measures were effective to ensure that all taxable remittances were taxed accurately.

“The country has witnessed a robust growth in outward remittances. The global economic downturn has prompted countries to close loopholes in tax especially through tax havens,” the Director General (Direct Taxes) in CAG, Meenakshi Gupta noted explaining why it conducted such a study. The CAG in its study closely looked into the angle of probable revenue leakages in transactions of remittances of foreign exchange, which could be used as tax base. In the context of curbing probable tax evasion in cross-country financial transactions that come under the ambit of the Double Taxation Avoidance Agreement, it reveals that ambiguity in the classification of incomes in respect of Foreign Institutional Investors and Telecom companies are leading to “inconsistent” assessments.