The government will focus on prosecuting tax offenders in a very short time as has been declared by the finance ministry in a statement.
Statistics of cases involving tax evasion:
The income tax department has recently conducted searches in groups and seized undisclosed assets of assessees amounting to the total sum of Rs. 582 crore and undisclosed income amounting to Rs. 6,769 crore in the financial year 2014 – 2015.
In the last year more than 600 prosecution complaints relating to offences in connection with undeclared foreign income have been filed. The undisclosed income detected later on upon further enquiries is much more.
As per the report of more than 1000 surveys conducted by the department up to November 2014, undisclosed income amounting to Rs. 4,673 crore was detected.
The special team conducting investigation relating to unrevealed money headed by the chairman justice M.B. Shah has suggested making evasion of income tax a serious criminal offence in the country. It has been recommended that such a bold step on behalf of the government would put a check upon the generation of black money within the country as well as upon sending the same abroad.
Tax evasion as an offence:
Any willful attempt to evade tax is a serious offence in India under section 276C of the Income Tax Act, 1961, punishable with imprisonment for a term extending up to seven years along with fine.
Presently tax evasion is dealt with under the Income Tax Act and its violations are dealt with under the Foreign Exchange Management Act. Both the said laws are civil in nature. The offenders can end up by paying a penalty in case of proceedings initiated against them.
However failure to pay service tax and excise duty in some cases situations is considered criminal offences.
Object of making tax offence a criminal offence:
The special team conducting investigation relating to black money has stated that making tax evasion a criminal offence would force foreign nations to reveal names and other details of Indians stacking black money abroad.
The former Supreme Court judge, Justice Shah has stated that if income tax offences will continue to be civil in nature, the foreign governments will not cooperate with the government of India. However if it becomes a crime, there will be no hurdles left to identify the evaders and the foreign countries shall be bound to reveal the names and account details of such Indians gathering black money.
It has also been suggested that tax evasion of Rs. 50 lakh or more should be made a ‘serious offence’ as it would enable easy investigation into tax evasion crimes under the stringent laws of money laundering as provided in the Prevention of Money Laundering Act.
It was further suggested that there was a need to limit large-value ‘unreported’ cash dealings done even at public places such as shopping malls.
It was further suggested that such measures would create criminal deterrence as well as social deterrence in the country.
Scenario in other countries:
Generally, it is considered that in tax evasion a taxpayer believes to commit a civil fraud. Whereas, a crime is any act done in violation of the duties against the community. Many crimes having their origin in common law have been created by statute.
In the United States tax evasion is a criminal offence resulting in levy of a penalty of up to $1, 00,000 or imprisonment for a term up to 5 years or both.
However tax evasion is distinct from tax avoidance. But tax avoidance, if is not successful, may result in tax evasion. In the United Kingdom tax avoidance resulting in tax evasion was a big issue in the last year. The government of China can award even death penalty in extreme cases involving tax evasion.
Tax administration in India involves political interference. In India at present the government should take a serious view of tax evasion and it is high time to declare it as a criminal offence. The law relating to tax should be amended accordingly and the tax administration should be strengthened. The government of the union of India is now seriously against all kinds of tax evasion which result in a huge loss of revenue.
