Three-Pronged Strategy To Curb Customs Duty Evasion Planned

The department of revenue is preparing a three-pronged drive to ensure that customs revenue does not fall short of budget projections. Confessing to some worry on this score, ministry officials said they would tackle customs duty evasion on three grounds: suppression of the actual quantity imported, under-invoicing of the imports in terms of unit value, and mid-declaration of the classification of the imported goods.

External help is being sought to achieve these objections. A new director-general has been specially positioned in Mamba to lead the effort. In addition, data on the actual value of goods is going to be sought from the US department of customs as well as from the Singapore authorities.

Further, the University of Florida has offered to help with data on the actual values of traded goods, which can then be matched with the values declared to customs in India.

Department officials said yesterday that, barring customs, there was no real worry on the revenue front in the current year. Collections from individual income and corporation taxes in April-May are in excess of the 15 per cent increase targeted for the year as a whole.

The actual figure for the two months this year is Rs 1,025 crore, compared to Rs 835 crore in the corresponding period last year. This shows an increase of about 22 per cent.

But, it was clarified that some of this would be on account of the fact that some companies (among them some public sector giants) had withheld tax payments towards the end of last year in order to take advantage of the lower corporate tax rates that apply this year. This would have given the early collections this year an initial boost.

Excise collections have been affected by the slow pace of industrial activity, but the department expects that this will be made up in the latter half of the year, as the industrial tempo picks up.

The overall tax collection scenario was described as optimistic.