Bangalore lags in netting errant service tax payers

BANGALORE: India's IT capital was expected to mop up Rs 800 crore in service taxes by the end of the ongoing fiscal through the government's amnesty initiative Voluntary Compliance Encouragement Scheme (VCES). But it's way behind target, said sources in the central excise department.

Union finance minister P Chidambaram had introduced the VCES in this year's budget to push service tax defaulters during the 2007 to 2012 period to pay up

The scheme, which offers a complete waiver on interest and other penalties, was expected to mop up Rs 5,000 crore this year, with Bangalore expected to contribute 16% of the overall collections.

Bangalore was among the top three cities expected to net errant service tax payers, with an estimated list of over 1-lakh persons. Pan India, while there are nearly 17 lakh registered assessees under the service tax ambit, only about 7 lakh file their returns.

So far Bangalore has only been able to mop up Rs 156 crore from 432 declarations made through the VCES. "Why Bangalore should be behind a city like Kolkata is something we need to find answers to," said Sumit Bose, revenue secretary, who was in the city on Wednesday along with the FM.

A senior official at the central excise department in Bangalore said that after sifting through preliminary data it was estimated that Bangalore had around 90,000 errant service tax payers from the earlier projected figure of 1.4 lakh. "We are working towards encouraging these errant tax payers, through the postal department and mass SMS services, to come forward and clear their dues through the VCES," said the official.

Addressing trade and industry representatives Chidambaram noted that the last tax related amnesty scheme Voluntary Disclosure of Income Scheme was announced in 1997. "Sixteen years later we have brought a scheme for service tax. So if anyone thinks that another scheme will come next year, I'm afraid they are mistaken," he said.

Chidambaram said the government had already started to crack down on chronic tax evaders by way of arrests and prosecutions. "Today we have the technology and we have a huge amount of information about tax payers. If we identify a tax evader and want to look at what he's doing, believe me we have the info and the technology to construct a 360 degree profile of that person," he said.