Tax department to prosecute service tax evaders from tomorrow

Beginning January 1, tax sleuths will prosecute those who have not used the voluntary compliance scheme to clear their service tax dues by December 31.

To facilitate voluntary declaration of the service tax, the tax offices will work till midnight on the last day of the year, said revenue secretary Sumit Bose. 

“From 1 January, stern action will be taken against service tax evaders, and the provisions in the Finance Act related to arrest and prosecution will be enforced in earnest,” said revenue secretary Sumit Bose. The provisions were made in the this year's Budget by finance minister P Chidambaram.

Meanwhile, the voluntary service tax compliance scheme has received an overwhelming response, the government said on Monday, a day before the scheme ends, and urged service providers to make the most of the scheme.

Since announcing the scheme, the ministry has received over 40,000 declarations involving Rs 5,500 crore until December 29, 2013. These pertain to taxation on services worth at least Rs55,000 crore and would have otherwise escaped the tax net. The scheme’s popularity can be gauged from the fact that in the last four days alone, the finance ministry received 16,000 applications, involving Rs1,500 crore in dues.

Service tax forms a major chunk of the government’s revenue kitty, and also witnesses a lot of evasion. To ensure that more service providers pay the tax, the finance ministry had announced the  amnesty scheme a few months ago.

Under the scheme, the ministry had said, those who declare and pay up to 50% of their service tax dues till December 31 will not be prosecuted.

The ministry has reminded service tax payers that tax offices will work beyond their regular working hours until midnight on December 31 to accept declarations.