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P Chidambaram asks service tax evaders to pay up
November, 12th 2013

Finance minister P Chidambaram sent out a stern message to tax evaders to come clean and pay their due taxes, warning that authorities were well equipped to catch them.

"Tax evaders may get away for a week, a month, year...We will eventually get you..There is no advantage in not paying taxes," Chidambaram said addressing an interactive meeting with industry on voluntary compliance encouragement scheme (VCES), here on Monday.

The minister said tax authorities had details about various financial transactions, permanent account numbers and sophisticated software to capture data from various sources to nab tax evaders.

"There are dedicated people creating profiles of economic offenders...Once you come on the radar then you are watched," he said, emphasising that service providers who had stopped filing their returns and making tax payments were indeed treading on dangerous territory.

Chidambaram is meeting industry in metros to pitch for the VCES that he unveiled in the budget this year.

He said the response to the scheme, which offers waiver from interest, penalty and prosecution along with confidentiality of returns, has been good and added that those willing to take advantage of the plan should not wait for it until the December-end deadline.

"Here is the last opportunity this government has given you....," he said, asking service providers to take advantage of the scheme.

The minister said the service tax was implemented in a benign manner in the beginning and harsh provisions of central excise were not incorporated in it to encourage service providers to come into the fold of the new tax. Arrest provision has only been brought in now after it was seen that many service providers would collect tax but not deposit it with the government. Tax authorities have arrested 10 offenders who were found to have collected tax in excess of 50 lakh from consumers but did not deposit it with the tax department. "..We arrested to send out a stern message," he said.

Of the over 17 lakh service providers registered with the service tax department, only 7 lakh pay tax.

"We have reached the tipping point where we have to pause, take stock, talk to you, offer a fair and generous transition method and persuade as many of you to come over to paying taxes before the tax is enforced in a strict manner...VCES is just that. The one who has not paid service tax to draw a curtain on the past and move on to a new chapter in his business," he said.

Service tax, which was introduced in 1994 on three services, is levied on all services except those in the negative list or specifically exempted since 2012.

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