Traders take Kejri for ride

Tax collections drop as raids on city bizmen stop

The AAP government’s announcement that it would do away with VAT-related raids if traders pay tax voluntarily is hurting tax collections in the city.

Government sources said traders have cut back tax payment and caused a shortfall of around Rs 1,200 crore from the annual  target of Rs 18,500 crore this year.

Finance Minister Manish Sisodia and a worried team of tax officials are now preparing to identify new tax payers, including importers of electronic gadgets and other consumer items, who are still out of the Delhi government’s tax net.

Arvind Kejriwal made a populist announcement at the time of taking oath on February 14 that he will end “raid raj” (raid culture). The raids have indeed ended but its result on revenue collection has been negative.

“The traders have stopped depositing tax,” said an official, blaming the absence of any fear of a official raid or a check.

The city’s traders seem to be enjoying the shield from raids offered by Kejriwal but have disappointed the Chief Minister by not doing their bit of honestly depositing their VAT to keep the city financially healthy.

Kejriwal, too, appears to have realised the problem caused by his blanket ban on raids. In the just concluded sitting of Delhi Assembly, he reminded traders about the shortfall of Rs 4,500 crore in revenue this fiscal and renewed his appeal to them for depositing taxes.

He also hinted at starting a internet-based system wherein the department will put all information on suspected tax defaulters and call such traders to office for giving explanations.

To make up for the shortfall in VAT collection, the officials are preparing to seek advance tax from the big taxpayers – a practice which is not considered financially healthy as it may impact the collections in the next fiscal.

“A proposal to tie-up with the customs department to keep track of big importers who never pay any local trade tax to the government apart from the customs duty that they pay, is being considered,” said an official.

Traders in Gaffar Market in Karol Bagh, Nehru Place in south Delhi and Palika Bazar, which are hubs of imported electronic gadgets like laptops, phones, cameras and beauty products, are likely to come under the scanner of Delhi’s VAT department which is desperate to boost tax collection.