Be honest with tax collector: finance minister to businessmen

Chidambaram asks businessmen to utilise the voluntary compliance of the service tax payment scheme

You cannot claim to be an honest person even if you play honest in 99 per cent of your daily transactions. Therefore, you cannot be an honest person if you are not honest with your tax collector. This was the message conveyed to businessmen by Finance Minister P Chidambaram on Wednesday while asking them to utilise the voluntary compliance of the service tax payment scheme.

Addressing traders and representatives of trade bodies here today, the finance minister said the Service Tax Voluntary Compliance Encouragement Scheme (VCES) was a generous and a rare opportunity to be missed. The scheme allows assessees to first file the declarations and pay the tax dues in installments without interest, penalty or prosecution for a period between October 2007 and December 2012.

According to Chidambaram, so far about 9,000 declarations have been filed with the Customs and Central Excise department and only 107 of them were rejected. The scheme ends on December 31, 2013.

The minister said he was worried over the compliance status because only 700,000 of the 1.7 million service tax assessees were paying tax even as 57 per cent of the gross domestic product (GDP) comes from the services sector.

There were no-filers and stop-filers when it comes to service tax and both the categories of people will soon find the department to be cleverer than them when the law reaches to those who do not pay tax, he warned. The government has adopted benign provisions as far as service tax compliance was concerned as it was a relatively new concept, but things might not stay that way, he said.