With expanding support base for anti-corruption crusaders, a nervous government on Wednesday announced setting up of yet another high-level committee in the finance ministry to recover tax arrears which have gone up to more than Rs 2.50 lakh crore, almost 50% of the total direct tax collection target for 2011-12.
A press note from the finance ministry on Wednesday said a committee was constituted by the Central Board of Direct Taxes (CBDT) to examine and suggest how tax arrears from "assessees not traceable" could be recovered. The government has been unable to recover taxes from many big tax evaders that include some corporate houses.
The panel will also suggest ways to recover dues in cases where assets are either inadequate or unavailable. For instance, Hasan Ali has been served tax notices, which include penalties, that add up to claims of over Rs 70,000 crore but may not have assets to cover these claims.
This is the third committee constituted by the finance ministry after it had last month announced a high-level committee headed by the CBDT chairman on black money comprising chiefs of Directorate of Revenue Intelligence and Enforcement Directorate as members; and a study on black money by leading economic thinks tanks.
The new committee will suggest modalities for utilization of the information available with Financial Intelligence Unit and the Income Tax department for the recovery of outstanding demand in such cases.
It will also examine the possibilities of engaging outside agencies to locate the whereabouts of non-traceable assessees or their assets and also unknown or undisclosed assets owned by the assessees with inadequate assets vis--vis the outstanding demand.
A reward scheme for informants who supply information about such tax defaulters and which results in collection of the outstanding demand may also be proposed by the panel. After the committee gives its recommendation, the government may go public with the names of chronic tax defaulters. The committee has been given two months to submit its report.
The I-T department has been trying to recover outstanding demands by using the asset and bank information available with the Finance Intelligence Unit and using details from the Annual Information Report data. The list of defaulters is matched with the asset data available.
Last year, the I-T department had circulated dossiers of at least 550 high net worth individuals and entities -- who had willfully defaulted or had unpaid tax of Rs 25 crore and above -- to field officers for recovery.
The dossiers included information on the recently acquired properties of these entities, their bank transactions and details on investments made by them in shares and mutual funds. The joint director and additional commissioner rank officers who were armed with such dossiers were asked to supervise the cases and if necessary to initiate attachment proceedings, that should include current movable and immovable assets owned by these entities.
Till March 31, 2010 the total arrears were Rs 2.30 lakh crore and with the start of the new fiscal another Rs 20,000 crore was added. The recovery, in comparison, has been very low, an average of Rs 12,000 crore a year.