Tax dept to close in on defaulters

Tax defaulters need to be prepared to face stiffer action from the income tax department this year.

As part of its new action plan, the Central Board of Direct Taxes (CBDT) has decided that tax recovery officers can invoke a rarely used clause in the tax lexicon to attach a defaulter's business and appoint "receivers".

This measure is part of the CBDT's strategy to recover arrears. The target for this year is Rs 11,700 crore, which is substantially more than the Rs 8,000 crore recovered last year.

Justifying the move, revenue department officials said while the law empowers tax recovery officers to undertake severe action, including asking the police to arrest and detain a person, the powers were seldom used.

"This year we want to ensure that the legal recourse available to is utilised," an official said.

Attachment of a business and appointment of a receiver means that the tax defaulter is prohibited from transferring or charging the business in any way.

The receiver has the powers for proper management of the property and the realisation of profits and rents.

The powers of receivers also stipulate that profits and rent of such business or other property be adjusted with the arrears, with any balances being paid to the defaulter.

In addition to these measures, the CBDT has also asked field formations to identify worthwhile cases where recovery of arrears can be made during the course of the financial year through special efforts.

It has also said that investigation wings at important centres should aid the recovery process by conducting surveys and secret enquiries to identify the assets for recovery in important cases.