DGCEI finds Rs 200 cr tax evasion by debt recovery agents

The Central Excise Intelligence has found service tax evasion of about Rs 200 crore by around 2,000 debt recovery agencies working for ICICI Bank.

'Our estimate is that the evasion is to the tune of Rs 200 crore by the agencies which are engaged in recovering debts for ICICI Bank,' said a source at the Directorate General of Central Excise Intelligence (DGCEI).

Till now, the DGCEI has come across tax evasion worth Rs 25 crore, the source said.

The bank has disbursed around Rs 2,000 crore to these agencies in the last five years but they (agencies) are yet to pay service tax on it. Out of the 2,000 evaders, around 400 are from Maharashtra, he said.

A DGCEI official said that other banks pay service tax to the agents separately, which these agents would pay to the service tax department.

But the commission paid by ICICI Bank includes the service tax and it is the duty of these agencies to pay tax, he said.

'Some of them are not even responding to our summons and we are searching for them,' he said.

Sources said that it is a nationwide operation and they are in touch with ICICI, which had shared the details with DGCEI after the investigation started.

Officials said that when some of the agents were questioned, they admitted evasion of Rs 20 crore.

When contacted, an ICICI bank spokesperson said, 'As per service tax law, the responsibility of payment of service tax in these cases lies with the service providers (agencies). As per the bank's agreements with collection agents, the overall commission paid by the bank to the agents is inclusive of all taxes. Hence it is the responsibility of the collection agents to pay the requisite service tax.'

ICICI Bank pays service tax wherever applicable, he added.