In warning to tax dodgers, Finance Minister P Chidambaram on Sunday said that a huge amount of data is being mined to go after them and ruled out any amnesty scheme for defaulters. "No. In income tax there is no case for amnesty. Because now almost all returns are online except a small category which was exempt. We have a huge amount of data which is being mined. Therefore, there is no case for amnesty today."
"Best case I can make out is tell people 'please don't hide your income'. Just admit your income and pay tax and be a proud citizen," he told reporters.
He was asked whether government would consider giving an amnesty to tax defaulters to unearth an estimated huge amount of black money on the lines of amnesty given to service tax defaulters announced in the Budget. VideoPhotoGallery
He said that three institutes were asked to make an estimate of the black money and they were working on it. Chidambaram pointed out that no tax burden had been imposed in the Budget on any category of people other than a "small burden" of 10 per cent surcharge on relatively affluent 42,800 people with incomes of over Rs one crore a year, he pointed out on Sunday.
That number was deliberately used to "shock" the nation that in this country "which swears by truth and virtue" there are only 42,800 people who admit an income of over Rs one crore, he said. Dispelling apprehensions that the tax could continue beyond one year, the Minister said, "surcharges have been imposed in the past and they have been removed". He gave the instances of removal of banking cash transaction tax and fringe benefit tax which were removed in subsequently budgets few years ago.
The Minister also allayed fears that tax on super rich would drive away people saying "... nobody will move anywhere, I assure you. Nowhere in the world you can afford to employ so many domestic helps. Wellness does not only come from wealth. It comes from host of other services that we have in place.
Voicing the hope that "other measures" proposed to be taken and the "shock" of the number would persuade more people to declare their true income, Chidambaram said that based on data mining notices have been issued to 35,000 people. Those served the notice have been told about what they had spent and about their purchases despite which they had not filed income tax returns, the Finance Minister said, adding another 35,000 notices are going next week to be followed more notices.
"We have got the central process cell in Bangalore which processes all income tax returns using most advanced software. So, if the information which we have from other sources is not matched with the information with IT returns, that will be thrown up," he said.
To a question, Chidambaram said there are no estimates on the amount of black income and the number who should be in the net but who are not. But, he said, in a country with 125 crore people, after excluding 67 per cent of the people under food security and elderly people and children, there would be 15 crore people with incomes in various segments. "The top 10 per cent should have large income...I think the number must be several times 42,800 who have high income," he said, adding they may not be earning Rs 1 crore but certainly Rs 75 lakh or Rs 50 lakh.
"They should be admitting to that income and paying income tax. I think not paying taxes is misdemeanour. Not paying the right kind of tax is another misdemeanour," he said.
The Finance Minister said that central processing centre in Ghaziabad, inaugurated last week, will now be able to track every single TDS deduction and match it with whether the deductor has remitted the money to the government and issued TDS certificate to the deductee.
"Every deductee can now see online what are the deductions that have been made by other deductors. The FIU unit is mining the data and generating data for the CBDT. The whole lot of activity going on.
"So my appeal to the people would be that there is no place where you can hide your income any more. Just admit your true income and be proud. Why should anybody be ashamed that he has a high income. When I was a lawyer, I had a high income in the past. I was quite proud about it. Why should I hide my income. You admit your income and pay your tax," he said.
Asked if there are any punitive measures on way against tax evaders, Chidambaram said, "No. I say my policy is stable tax rate. Non-adversarial tax administration and a fair and just dispute resolution mechanism.
"I think the method that we are following is mine the data. Issue notices and gently push them into filing returns and pay the taxes. This is the correct way to go about it".
To a question that he had not addressed the issue of black money in the budget, the Minister said, "these are your sexy subjects. I could go into a long lecture about the black money. I think it would be complete waste of time. "Yes there is a black money in this country. There are reasons why black money is generated. We can make estimates of the black money. But simply by beating your breast about black money you do not solve the problem. You solve it by employing technology using process that will bring black money out and make the black money out and make the black money holders admit it and file the return".
He said that three institutes were asked to make an estimate of the black money and they were working on it. On the amnesty for service tax evaders, Chidambaram said, service tax law is a benign administration and the gap between those paying and those not paying is 10 lakh registered assessees.
"We have to address this gap as one time measure. I don't have the machinery and the manpower to go after 10 lakh people who have not filed. Therefore, we are offering a one-time amnesty. Well amnesty is a strong word because the tax not
only for the current year, they will have to pay the tax for five years. If they do then we will waive the penalty and the interest.
"I think it's a good offer. When I made the offer in Parliament, a lot of people applauded it. So obviously there is Parliamentary support for it and let's hope that several lakh people will take advantage of the offer and file the returns," the Minister said.