JOIN USIn a country with inexplicably low level of tax compliance, the amnesty scheme announced in the Union Budget 2013-14 is a good opportunity for defaulters to come clean and pay service tax arrears to avoid inevitable consequences, according to a senior revenue department official in Bangalore.
At a seminar organised by trade body Assocham on the Budget, the Chief Commissioner of Central Excise, Bangalore Zone & LTU, Joy Kumari Chander said, “The message should go to all such defaulters. If they come forward and pay the dues upfront, the matter will be treated as closed, no prosecution, no harassment. If not, they will have to face the consequences.”
The scheme called “Voluntary Compliance Encouragement Scheme 2013 (VCES) aims to motivate about 10 lakh registered assessees of service tax who neither file returns nor pay tax dues. Under the VCES, a defaulter can file declaration of service tax dues since October 1, 2007 to December 31, 2012 and make the payment in one or two installments by pre-determined dates. In such cases, penalty, interest and other consequences will be waived. The scheme is however not applicable to those against whom any inquiry or investigation is pending, either by way of search warrant or summon or audit.
In the Bangalore Central Excise and Service Tax Zone comprising nine districts, there are about 1,06,944 registered service tax assessees but only about 40,000 of them pay service tax. The total service tax collected by the Zone during April-January this fiscal was Rs 6,124 crore, while Rs 5,787 crore was collected through excise duty from about 8,000 registered assessees. The full-year target is about Rs 16,900 crore.
As of January 31, 2013, the Zone had about 5,445 cases involving an amount of approximately Rs 9,678 crore stuck in litigation in various forums. On the direct taxes front, the amount collected for Karnataka and Goa region was Rs 45,824 crore in 2011-12 with 17.77 lakh assessees, said the Commissioner of Income Tax, Bangalore, Krishna Rao.
“The target for this fiscal is Rs about Rs 50,000 crore and Rs 55,000 crore for 2013-14,” he said, and added that the tax-to-GDP ratio of 9.9 per cent (direct taxes at 5.5 per cent and indirect taxes at 4.4 per cent) estimated for the current year is indeed low, when compared to 11.9 per cent in 2007-08.
The Report of the Committee on Roadmap for Fiscal Consolidation chaired by economist Vijay L Kelkar and submitted last September had pegged the ratio at 10.1 per cent for 2012-13, down from the earlier 10.6 per cent, attributing it to “reduced corporate profits, slowdown in industrial output and lower growth in imports.”