Taxman spoils party for party managers

Dec 13 2012, 11:00 IST
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SummaryWith the marriage season on, service tax dept begins drive to clamp down on tax evaders.

With the marriage season on, service tax dept begins drive to clamp down on tax evaders.

The party seems to be over for party organisers. The service tax department has started clamping down on tax evaders involved in event management or providing tents and shamiyanas for marriages and other purposes.

The move comes in the backdrop of undervaluation of income during the ongoing marriage season.

An official source told Delhi Newsline that the service tax commissionerate in Delhi has prepared a list of over 15 companies, including tent/shamiyana providers and event managers, which have not disclosed their true income for the payment of service tax. The commissionerate has also begun searches and seizures from Wednesday.

“We searched the premises of two entities on Wednesday and many more will follow. This is the first time we are focussing on this sector. The marriage season has been on for some time and, yet, the income showed by a few companies is suspiciously low,” the official said.

Each defaulter, the official added, “owes more than Rs 50 lakh in service tax dues to the department”. The drive has started in Delhi and Mumbai and will soon be extended to other cities.

A service tax at the rate of 12.36 per cent has to be paid by each service provider. With effect from April 4, 2011, the government has made failure to pay service tax on the amount collected a criminal offence punishable with imprisonment.

The official said the undervaluation of tax liability had been happening for some time, prompting the department to study the sector.

The department is also probing the books of accounts of such companies. Each entity providing any kind of service has to furnish the details of taxable income to the department and very “few companies have failed to do even that”, the official said.

“On the basis of information on their earnings procured from secondary sources, the list of defaulters has been prepared,” the official said.

During the first seven months of this fiscal, service tax collection stood at Rs 69,465 crore while the indirect tax collection, including excise, customs and services tax, was Rs 2.57 lakh crore.

The government had budgeted Rs 5.05 lakh crore from indirect taxes this fiscal.

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