FM talks tough on service tax evaders

Warns 360 degree profile can be constructed to trace evaders

Taking a firm stand on tax evaders, Finance  Minister, P Chidambaram, today said that  people evading service tax would not escape from the government and the latter could construct a complete profile of evaders once they were under the scrutiny of any of the tax departments.

"All your financial transactions can be traced  once you are identified as a tax evader. We can construct a 360degree profile on such evaders,"  the minister said here on Tuesday while inaugurating the Kolkata leg of his interaction with trade and industry on the Service Tax Voluntary Compliance Enforcement Scheme.

"In fact, we have such profiles. We have dossiers on them. The government will have the option to arrest and prosecute chronic offenders", he said, adding that so far 13 arrests had been made all over the country.

According to the union finance minister, the services sector constituted 55 per cent of the GDP of the country, thus services must be taxed as much as capital goods.While speaking at the event, he pointed out that  at present, there were 17 lakh registrants of service tax.

"This is a healthy number. But only seven lakh out of them pay service tax. The rest have forgotten. Some of them are either no-filers or stop-filers," he added.

There is a need to reach out to the remaining 10 lakh, he said. He urged the traders and others to take advantage of the VCES scheme and then  come out clean. The notorious sectors which were collecting service tax but not depositing with the government were construction, couriers, telecom and security services among others, the minister claimed.

To bring back non-filers, the scheme has been operational since May 10, and will continue till December 31. The scheme offers ‘no penalty, no interest’ and provides one-time opportunity to the defaulters to come clean. Under it, the defaulters have to pay at least 50 per cent arrears for the five-year period ending 2012 and the balance in another six months without interest.