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03 Apr 2017

GST tightens its noose over tax evaders in India

Central GST cracks the whip on tax evaders

Under the new GST regime, tax evasion of over Rs. 5 crore is a non-bailable offence and police can nab the culprits without a warrant.

Central Board of Excise and Customs released dossier also demarcates offences under the act which are bailable.

This comes as a subsequent follow up Jaitley's statement that the roll-out of GST will make tax evasion difficult post July 1.

In context

Central GST cracks the whip on tax evaders
The new rule book of the government to tackle evaders

Fine print

The new rule book of the government to tackle evaders

According to the dossier, offences which are pertaining to taxable goods and/or services fall under this radar.

The instances include - where the amount of tax evaded or the amount of input tax credit wrongly acquired or if the amount of refund wrongly taken by falsification exceeds Rs. 5 crore.

The crime shall be treated as a cognizable and non-bailable offense.

No need of warrant

Cognizable offence proceedings under the new regime

In a cognizable offence, police will now be able to make arrests without a warrant and also start an investigation against the accused without requiring a mandatory approval from the court.

However, it is mandatory that the accused be served with a written memorandum of the ground of his arrest and has to be produced before the magistrate within twenty four hours.

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Proceedings in case of a bailable offence

Bail granted

Proceedings in case of a bailable offence

If it's a bailable offence according to the act, the police can't arrest without a proper warrant and a subsequent investigation can only be initiated with a order from the court.

The Deputy/ Assistant Commissioner of CGST/SGST can release him on bail, however, absence from summon would lead to a fine of up to Rs. 25,000.

Tread carefully

It's a last measure and shouldn't be put to misuse

The tax department has been given strict instructions on how to carry out such a measure and has been warned to not misuse their authority.

The guideline reads it should be used as a "last resort where assessees are not co-operating and this should not be used for the top management" and "the language of the summons should not be harsh and legal".

Loophole or just a sign of treading carefully?


Loophole or just a sign of treading carefully?

According to the guidelines senior management officials such as CEO, CFO, General Managers of a large enterprise or a PSU should not be issued summons at the very first instance.

They can only be sent summons when there are defined indications in the investigation that they were involved in the decision making stage which has led to the subsequent loss of revenue.

Tax evasion

32,000 entities under radar, 4 lakh crore evaded post demonetization

Around 32,000 entities are said to be under the radar of SEBI and IT department for evading taxes through unbridled misuse of long term capital gains and short term capital loss.

An analysis also suggested that during demonetization phase, 3-4 lakh crore of tax-evaded income may have been deposited during 50-day window which was provided to deposit old currency.

Where is nation's most infamous defaulter?

According to the latest reports, UK govt has certified the extradition of the Vijay Mallya who has been accused of loan default of over Rs. 9,000 crore. However, the entire process may still take months or even years to complete.

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