Concerned over rising incidents of tax evasion, a Parliamentary Committee today asked the government to keep a close watch on high spending individuals and also take steps to reduce tax arrears.
"...the Revenue Department should also keep a close watch over high spending individuals and large monetary transactions and bring them into the tax net," Standing Committee on Finance headed by BJP leader Yaswant Sinha said in its report tabled in the Lok Sabha.
Noting that the fiscal measures stated to have been taken thus far seemed to have had limited impact on tax buoyancy over the years, the Committee has recommended that there is a need to plug tax evasion as well as avoidance in order to increase the aggregate tax buoyancy and to augment the tax-GDP ratio.
The panel also asked the Indirect Tax Department to tighten the enforcement mechanism so as to prevent and control service tax evasion in general.
"The Committee note with surprise that in direct taxes, out of total arrear demand of Rs 2,48,927 crore, a demand of Rs 1,33,665 crore is not realizable and, a tax demand of Rs 61,846 crore falls under the category of difficult to recover, leaving a balance of mere Rs 7,348 crore as collectible arrears," it said.
"The Committee are alarmed at such a huge amount of tax due to Government, which cannot be collected at all," it noted.
Out of the total arrears of Rs 2.48 lakh crore, Rs 1.30 lakh crore approximately pertains to money laundering and securities scam cases.
As per the data provided by the Finance Ministry, Hassan Ali Khan group has arrear of Rs 91,859 crore, Harshad Mehta Group Rs 20,244 crore, Ketan Parekh Group Rs 4,017 crore and Dalal Group Rs 14,379 crore.
In Hassan Ali Group, the recovery is not possible though all known immovable and moveable assets belonging to the group have been attached, the Finance Ministry said in its submission before the committee.
Pulling up the Finance Ministry for not achieving target on recovery, the panel said "the arrear figures reflect very poorly on the efficacy of the recovery mechanism devised by the Ministry which requires a review immediately."