It Is Time To Come Clean

by Vikash Dhanania Consultant In the world capital markets India is in a weak spot due to the burgeoning fiscal deficit. The currency has also taken a hit because of this. In order to solve the crisis, the government is taking various measures to contain the fiscal deficit by increasing revenue and decreasing expenditure. The Voluntary Compliance Encouragement Scheme or VCES 2013 is one such attempt by the government to increase the revenue.

It is basically a one-time service tax amnesty scheme where any penalty, interest and other proceedings under the Finance Act, 1994 will be waived provided the person files an honest declaration of his/her service tax dues and makes payment for the same. According to the Finance Minister, there are around 17 lakh registered tax assesses under the service tax law out of which only about 7 lakh assesses file their service tax returns. So, this scheme is a great opportunity for those people to make amends and avoid any form of punishment.

Those taxpayers who have been responsibly paying their service tax dues honestly year after year cannot enjoy the benefits of this scheme. Instead, this scheme is available to those assesses who have stopped filing their service tax returns or have not been disclosing their correct amount of service tax liability. But a person against whom there is any pending investigation or inquiry cannot apply for this scheme. Those people availing this scheme need to truthfully state their unpaid tax dues from the period between 1st October, 2007 and 31st December, 2012. They also need to pay 50 percent of their tax dues before 31st December, 2013 and the balancing amount by 30th June, 2014.

This scheme is not only meant to be an opportunity for past defaulters but is also supposed to serve as a warning for potential future defaulters of strict punishment. According to existing provisions, delayed payment of service tax will attract additional interest payment at the rate 1.5 percent per month to 24 percent per annum depending on the period of delay. For other offences like non-payment of service tax and failure to comply with the service tax law will result in penalty payments. Moreover, a tax evader may also face other forms of punishment like attachment of property and imprisonment.

A booklet containing the frequently asked questions relating to this scheme has also been released by the Finance Minister to spread awareness about the benefits of the scheme and the consequences of failure to pay the tax dues. These questions are based on the inputs received from the various industry sources and it will be of immense help to service tax payers in filing returns.

The interpretation of any law, rule or scheme can throw up a wide range of issues, challenges and unanswered questions especially when it is related to taxation. This scheme will not be any different in that regard because each tax payer will look for ways to find loopholes and reduce their tax burden. In the coming days we can safely expect further clarification notifications and circulars on this scheme.

Author Bio:

The author of this article takes a keen interest in issues relating to indirect taxes. Currently he is educating himself on corporate taxation trends like Service Tax Amnesty Scheme.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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