Service tax defaulters under scanner, says Chidambaram

Union Finance Minister P Chidambaram today said government would 'very closely' focus on sectors prone to chronic service tax evasion like consultancy, IT and real estate. 

He said he had noticed chronic tax evasion in various cities (like Chennai) in contract service, maintenance and repair service and sectors like consultancy, IT, real estate, mining, transport operators, advertisement, storage and warehouse, manpower and recruitment and security services. 

The Minister said he believed this was true all over the country. There was no reason to believe that if one sector was not paying the tax in Kolkata, that sector would be more compliant in Chennai, he said. 

"Those who are in these sectors must remember that the (Finance) Department will have a closer look. These are the tax evasion prone sectors. We are going to look at these sectors very, very closely", he said. 

The Minister was speaking at an interactive meet on Trade and Industry, Service Associations and Chambers of Commerce and Industry on Voluntary Compliance Encouragement Scheme (VCES). 

Referring to the scheme, he said it was one of the most generous and fair packages offered by the Government. 

"I am assuming everyone is a honest citizen.You are honest in most actions. When you make a vow before your favourite deity, you are honest. You go and carry out the vow. You are honest while you are dealing with your spouse, children. Why should you be not honest with the tax department?", he asked. 

Urging members to pay the taxes, he said non payment might be out of ignorance or financial pressure. Taxes may have been paid over a period of time or completely stopped. "All that is being washed away by this scheme. The past will be completely closed". 

"No questions will be asked. You should file your declaration, pay taxes in the current period and you will not be obliged to pay any interest, any penalty or face any prosecution", he said. 

VCES had been introduced with effect from May 10, 2013 as a one time amnesty scheme for paying service tax dues for the period October 1, 2007 to December 31, 2012 without interest and penalty. (ET)