Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: articles on VAT and GST in India :: empanelment :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: VAT RATES :: TDS :: cpt :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: VAT Audit
News Headlines »
 Delhi: 54 CAs, company secretaries on radar in I-T crackdown against black money
 10 most important income-tax changes which will apply from April 1
 10 Income Tax Rules That Will Change From April. See Details Herea
 Looking for last-minute tax planning with Section 80C investments? Here's help
 Aadhaar mandatory for filing income tax return
 Will Aadhaar linkage solve India's income tax woes?
 GST roll out from July 1 will make goods cheaper: Jaitley
 Aadhaar To Be Mandatory For Filing Income Tax Return, PAN Application
 7 best tax-saving solutions which can help you save money
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 How to Make Tax Saving Investments Less Taxing with an SIP in ELSS

Pay tax and convert your black money into white
April, 05th 2010

An income-tax raid on a Delhi-based infrastructure and power major with a turnover of over $2.5 billion led to the disclosure of unaccounted income worth Rs 212 crore. Assuming a profit rate of 10%, the disclosure also amounted to an admission that the businessman had withheld disclosing a turnover worth Rs 2,000 crore which, had it been accounted for, would have spelt big gains for other tax departments such as service tax, central excise, VAT and others.

But with the departments failing to come together and with the income-tax department itself fighting shy of using stringent provisions in its armoury to deal with tax evaders, the businessman has got away simply by agreeing to pay income tax.

This is not an isolated instance. Last month, a steel manufacturer on the outskirts of Delhi made a bigger disclosure after an income-tax raid.

The reluctance of the I-T department to use provisions designed to deal with such cases and the lack of co-ordination among different tax departments is encouraging a new way of legalizing income kept hidden from the government. Under Section 271(1)C and 271 AAA of the I-T Act, the I-T department has powers to levy a penalty of 100%-300 % on all such disclosures where the modus operandi is not revealed and the source of funds not fully explained. For every Rs 5 crore disclosed, I-T laws provide for a penalty of Rs 1.5 crore in addition to a tax of Rs 1.5 crore and an interest of Rs 50,000.

System flaws make India a big tax haven

Although the income-tax department is empowered to slap a hefty penalty in tax evasion cases, rarely has any firm which makes "disclosures' ' after an I-T raid been subjected to such penalty. "If an entity can disclose unaccounted income of Rs 200 crore in one year, is it possible that the firm was fair in its dealings in all the previous years of its existence,'' asked an official.

The laxity seems to have started a trend. According to the finance ministry, during the financial year 2009-2010, over 2,300 search and survey operations were conducted up to December 2009, leading to the seizure of cash and assets worth Rs 602 crore and a disclosure of Rs 1,832 crore of unaccounted income.

The I-T's Gujarat unit recently claimed to have unearthed Rs 2,877 crore as undisclosed income in 25 raids on industrialists and businessmen across the state in the last one year. The figure for the previous year was Rs 1,000 crore.

Every year since 2005, income-tax raids lead to disclosures of thousands of crores which are estimated to amount to less than 10% of the actual
evasion. This makes the country one of the biggest tax havens, where a parallel unaccounted economy thrives. Why have enforcement agencies failed to plug loopholes that lead to corporates tricking the system even after a multitude of search and survey operations?

Sources said the accused firm or individuals always manage to get away by paying a tax of 30% and cess on the disclosure. Seldom have they revealed the mode and the manner in which such income has been earned or the entities where such unaccounted money has been reinvested, as mandated under the I-T Act. That ensures the unhindered run of the parallel economy.

The enormity of money laundering was revealed in a data compiled by the I-T department in 2005-06. The information was packed in a CD that contained a list of over 6,000 individuals, many of them among the who's who of the country, and a copy was circulated among all chief commissioners for further action. The CD contained particulars of 20,000 bank accounts and details of transactions between hawala dealers and beneficiaries. Simultaneously, the department, in a crackdown on hawala dealers, had unearthed transactions worth over Rs 3,000 crore in Delhi alone. The entry operators had issued cheques against cash deposits in their accounts and raised bogus bills for a commission of 1% of the total transaction.

In one such case, I-T sleuths had unearthed transactions of Rs 1,540 crore at the Fatehpuri branch of Federal Bank in the capital in 2005. During investigation, it was found that only three individuals had transacted the entire amount of Rs 1,540 crore.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Application Management Solutions Application Management System Application Management Software System Application Management Development Application Management Software Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions