Trace a tax defaulter, get up to Rs 15 lakh reward

MUMBAI: In a bid to recover income tax dues from defaulters whose names have been publicly disclosed but remain untraced, the finance ministry has announced rewards of up to Rs 15 lakh to people who can provide information to help the authorities track down these high-value tax defaulters.
READ ALSO: I-T dept names India’s 18 biggest tax defaulters, 11 from Gujarat
With dues from such offenders running into several hundred crores of rupees, the finance ministry came out with new guidelines on August 26 that would enable financial rewards for “specific and credible information” about the whereabouts of the defaulters.“Informants will be eligible for rewards based on the tax collected as a result of any administrative or judicial action resulting from the information provided,” say the new norms, details of which are available with TOI.
Under the guidelines, the quantum of tax collected will be determined only after all the I-T assessments are finalised and there is no appeal by the defaulter or other litigation pending. The reward will not exceed 10% of the tax recovered due to the information or documents supplied by the informant. The cap of Rs 15 lakh, however, can be relaxed by a committee comprising three high ranking I-T officials.
READ ALSO: I-T department publishes list of 31 big tax defaulters
To guard itself against any litigation, the new norms, called the “Guidelines for grant of rewards to informants leading to recovery of irrecoverable taxes, 2015”, say the grant of rewards is discretionary and outcome of the reward claim cannot be disputed in court. A scheme to reward detectors of tax evaders already exists and financial incentives are given to people who provide details that result in search and seizure operations and issue of fresh tax demands.
“The existing reward scheme rewards those who help unearth more tax revenue for the government,” a government official explains.
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An informant who has worked with the authorities earlier points out it may not be all too easy to sniff out the defaulters. “In some cases, the I-T demands were raised 20 years ago. It is unlikely that the parties can be traced,” he says. Besides, he points out the disincentive inherent in the new format. “The new guidelines say the rewards will follow only after final assessment and if there is no pending litigation. This means that one has to wait several years for the reward.”
READ ALSO: Gujarat tops among tax defaulters in the country
It was in March that the finance ministry decided to publicly “name and shame” high value tax defaulters. The first list of 18 defaulters collectively owed the I-T department Rs 502.90 crore. Later in April, another list of 31 defaulters who owed Rs 1,510.83 crore was released. The second list included some corporate defaulters, including Totem Infrastructure (Rs 401.64 crore) and Royal Fabric (Rs 158.94 crore), both of Hyderabad, while Pune-based Patheja Brothers Forging and Auto Parts had a tax outstanding of Rs 224.05 crore.