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Indian Minister Stresses Need For Filing Compliance

by Mary Swire,, Hong Kong

04 January 2013

India's Revenue Secretary has called on taxpayers and assessees to "do their part" by paying their taxes in a timely manner and by meeting with the law, warning that the government will not tolerate non-compliance.

Speaking to the media, Shri Sumit Bose voiced particularly strong criticism of allegedly non-compliant Central Excise assessees. A number are removing goods clandestinely, the minister said, mis-using Central Value Added Tax (CENVAT) Credit or even going so far as to not pay the Central Excise duties due to the government. India's revenue authorities are accordingly "keeping a very close watch on such elements," Bose warned, urging those who behave in such a fashion to come forward, and take advantage of reduced penalty rates. Those who fail to do so face a number of sanctions. These include the recovery of the tax due, along with interest and penalties up to 100%, the suspension of CENVAT Credit, a provisional attachment of property, and potential arrest and subsequent prosecution.

From Bose's comments, there appear to be issues with the planned implementation of changes to the service tax regime. With effect from July last year, all services are taxable, aside from those on the new Negative List. However, according to Bose, a number of service providers who should be paying service tax now have not yet registered themselves. Further, more than half of those who have registered are not filing returns, while others are collecting the tax from receivers but failing to provide the government with the revenue due. The government will not tolerate such non-compliance, Bose made clear: "Let me warn them that all such service providers will not only be liable to pay the service tax along with interest and penalty which may be equal to the service tax evaded, but they can also be prosecuted for these offences."

Finally, importers and exporters can also expect to feel the force of a government crackdown. According to Bose, a use of under-invoicing in import and over-invoicing in exports, together with the ms-declaration of goods and the misuse of exemptions and incentive schemes to evade customs duty has been detected. "Unscrupulous elements" are already on the authorities' radar, he said, and those who fail to meet with regulations should be prepared to face the consequences.

"The government would urge all assessees to ensure that they make timely and correct payment of customs duty, central excise duty and service tax for continued trade facilitation," Bose concluded.

TAGS: compliance | tax | India | interest | law | excise duty | regulation | penalties | trade | services

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