Indian Finance Minister Says Tax Evasion Loopholes Will Be Plugged

by Mary Swire, Tax-News.com, Hong Kong

13 July 2001

Addressing the All India Conference of Chief Commissioners and Directors General of Income Tax in New Delhi earlier this week, Indian Finance Minister Yashwant Sinha justified the recent release of draft rules on the taxation of corporate perks, saying that large Indian companies are known for concealing their true income behind 'a veil of perks' for top level employees.

'There is no way we can allow evasion of taxes through imaginary way of perks which corporates devise,' said Mr Sinha. 'We thought more transparency is needed in this respect.' However, Mr Sinha also promised that the government would be reasonably liberal in its implementation of the rules, which are currently undergoing public scrutiny.

Stressing the need to increase revenue, the Finance Minister announced to the conference that he aimed to increase the number of personal income tax assessments this fiscal year, and asked the senior officials to improve tax compliance through greater supervision and surveillance. 'Basically we are looking at a figure of Rs 600 billion to Rs 700 billion from personal income tax in a period of three years, which will represent 1.5% of GDP,' he explained.

He told the assembled delegates that although the shortfall in corporate tax collection would need to be examined, the fact that direct taxation was consistently accounting for a higher share of Gross Domestic Product was a welcome development, and advised the senior officials to concentrate on widening the tax base.

Recommended