Make use of service tax amnesty: FM

Says Voluntary Compliance Encouragement Scheme was an opportunity to come clean, make fresh start

Finance Minister P Chidambaram on Wednesday warned service tax evaders that the ongoing amnesty scheme set to end on December 31, is the last chance for complying with the tax regulations in the country.

Speaking at the inaugural of an interactive session with businesspersons, taxpayers and tax professionals in Bangalore, Chidambaram said the Voluntary Compliance Encouragement Scheme (VCES) is "an opportunity to come clean and make a fresh start".

However, he made it clear that tax evaders would eventually be "reached".

"The countdown has begun, and the last date is December 31. The government has made a fair and generous one-time offer that is not likely to come your way for at least a couple of decades,” he said.

“Therefore, it is in the best interest of everyone to take advantage of the offer," he said, adding the last amnesty scheme was announced in 1997, called VDIS. Now, 16 years later we have launched such a scheme for service tax."

"If anyone feels another scheme will come next year, I'm afraid they are mistaken. These schemes cannot be announced every year. There should be a good reason why we have to do so," he said. Explaining the reasons, he said "We started by introducing service tax and administering it in a benign way, with paying dividends. While 17 lakh service tax providers registered as service tax members, only 700,000 actually paid service tax, the remaining 1 million did not pay service tax." Although 107 applications under the VCES have been rejected, the FM said they would be reviewed after the December 31 deadline.

Chidambaram said tax administrators, the Customs Department and the Financial Intelligence Unit have gathered "a lot of information" from various economic entities, which can be "used to identify tax evaders". "Believe me, we have the information and the technology to construct a 360-degree view profile of such persons," he warned. "This is how we have identified a number of chronic tax evaders, and arrest a number of such persons," he added.

Union Revenue Secretary Sumit Bose said, 9,000 applications involving an amount of Rs 2,000 crores have been received so far. Bangalore, he said, lags centres like Kolkata in collections under the VCES.