Information Regarding Tax Evasion

The Government is focusing on increasing use of Information Technology for detection of evasion of tax. The Government also receives information on tax evasion from public at large through letters, e-mails, reports in media etc.  the Government grants rewards to persons who provide information useful for detection of tax evasion and realization of taxes subject to certain guidelines issued by Central Board of Excise and Customs (CBEC) and Central Board of Direct Taxes (CBDT).

Both the CBDT and CBEC have issued guidelines to reward the person giving information on tax evasion. The allocation and disbursement of funds by CBDT to reward the informers during last three financial years is as under:

(Rs. in crores)

In case of indirect taxes, the CBEC does not maintain the data relating to amount of the funds allocated/disbursed as rewards centrally.

The Government has been increasingly using information technology and integration of various sources of information relevant for detection of evasion of Income Tax.  Systems have been put in place through which the Income Tax Department periodically receives information of high value transactions in specified categories such as immovable property, shares and securities, mutual funds, transactions through credit cards, cash deposits in Banks etc.  The information so collected is analyzed for further necessary action.  For indirect taxes, the reward guidelines are widely published in departmental web sites by the field formations of CBEC and also their officers have been sensitized to cultivate information and intelligence for detection of tax evasion.

Due to following the above procedure and guidelines, the Direct Tax collection has increased 6 fold, in the last decade, from Rs. 69,198 crore in Financial Year 2001-02 to Rs. 4,46,070 crore in 2010-11 and the growth of nearly 2 times in the Direct Tax to GDP ratio in the same period i.e. from 3.03 per cent in 2001-02 to 5.66 per cent in 2010-11.  The Income Tax Department conducted several searches and surveys and brought substantial additional income to tax.  In case of indirect taxes the CBEC is able to get a large number of information, which results in detection of tax-evasion cases.  However, this data is not maintained by CBEC centrally.