The Indian government has been steadily taking strict measures to help maximize the national revenue for the exchequer. And one of the best places to start looking into is the current foreign trade practices, especially custom duty section, which show a lot of technical drawbacks at the disposal of a shrewd tax evader.
As a result, a huge of loss of revenue is being estimated by the Cabinet officials because of the loopholes in the present Customs Act, 1962, especially the Section 28, old Benami Transactions (Prohibitions) Act, 1988.
This question was raised by Ambika Soni, Information and Broadcasting Minister, when she said, "Officers of the Directorate of Revenue Intelligence (DRI) will alone have issued notices involving customs duty to the tune of over Rs 7,500 crores...Also tax evaders will not get benefited at the expense of exchequer on a mere technical ground." She supported the statement that a huge amount of revenue is lost due to a gap in the present Customs Act, which results in a loss of around 7,500 crores in custom duties.
For this reason, there is a reconstructed, modified Benami Transactions (Prohibitions) Act, 2011, being proposed and approved by the Cabinet, which will allow particularly recognized officials, a few 'proper officers' to assess the import duty. This recognition process would be influenced mainly from a retrospective perspective, as Soni said.
Apparently, these new, more powerful Custom Acts changes, in the benami transactions category, which is yet to be initiated in the upcoming monsoon session in the Parliament, would result to stricter supervision of the custom duty practices, ultimately leading to higher revenue generation for the country.
In fact, under the latest proposed statute, one found to be on the guilty side can be jailed for a minimum of six months, which can further be extended to over two years, along with a hefty fine.
As a matter of fact, this newly proposed legal decree should help solve a number of pending duty settlement lawsuits before certain judicial and quasi judicial authoritative bodies, which were rendered invalid by the Supreme Court (SC) in February on mere technical grounds. This should recover a sufficient amount of due money from the tax evaders.
This definitely sounds like good news, of course but still the consequences seem to be unclear at the moment. There is always a repercussion on the general public and it is quite unclear how this would turn out in the upcoming few years.