Services under taxman’s scanner, third party info introduced

Services under taxman’s scanner, third party info introduced

New Delhi: Amid dismal tax collections, service tax mop up provides a ray of hope for the Centre but certain sections in this category have come under the scanner of tax authorities.

The Central Board of Excise and Customs (CBEC) have tightened noose on commercial renting of immovable property and telephone companies by receiving information through other sources to detect any possible evasion of service tax.

“Third party information is an ongoing exercise. We have now started it in service tax also. Right now we have included two things, commercial renting of immovable property and telephones," CBEC Chairman P C Jha said.

Third party information relates to assessing other sources than service tax to see if there is any evasion of tax.

With regard to commercial renting of immovable property and telephone companies, the board has decided to see the income tax returns, property tax paid to municipal authorities and expenditure on inputs claimed as tax benefits, Jha said.

However, service tax collections are the only kitty which has been swelling at buoyant pace despite economic slowdown.

“Service tax collections are doing very good. We are above the required rate of growth of 26.2%. The service tax collections growth was 30% up to October," he added.

Meanwhile, the government earlier this year had introduced third party information for detecting evasion under the excise duty head, concerned over evasion under this head.

Third party information in this case uses sources such as electricity bills and Value Added Tax (VAT) payments by manufacturers. This system also requires all the assesses to furnish information related to their annual production capacity in a new form called ER 7.

The government had also advised the central excise field formations to identify evasion prone commodities and seek data relating to electricity consumption of such units from the distribution companies.

They have also been asked to verify the production details declared in the monthly excise returns.

Excise duty collection have fallen by a substantial 15% in the month of November.

The third party information originally started to detect evasion in income tax payment where department gathers data from seven entities such as banks, mutual funds, Reserve Bank and companies, on transactions over a certain limit.

For instance, banks have to provide information on cash deposits over Rs10 lakh and credit card payments over two lakh in a year while MFs are expected to share information on customers who invest over Rs2 lakh for acquiring units in their schemes.

Besides, data on people who invest over Rs5 lakh in bonds and debentures of a particular company, is also provided to the income tax department and the department is also notified in case of sale or purchase of immovable property worth Rs30 lakh or more.