Lok Sabha Question No. 81 (STARRED), answered on 2016-04-29
Subject: Tax Evasion
Ministry: FINANCE
Asked by: NANABHAU FALGUNRAO PATOLE, NALIN KUMAR KATEEL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK    SABHA STARRED QUESTION NO. *81

TO BE ANSWERED ON FRIDAY, THE 29 TH  APRIL, 2016 /9 TH Vaisakha, 1938 (SAKA)

## TAX EVASION

†*81. SHRI NANA PATOLE: SHRI NALIN KUMAR KATEEL: Will the Minister of FINANCE be pleased to state: (a) whether any study/survey to assess the quantum of tax evaded in the country has been commissioned, if so, the findings thereof; (b) whether the Government has reviewed the mechanism put in place to detect tax evasion, if so, the details thereof; (c)  the  deficiencies  noticed  in  the  said  mechanism  in  tax  avoidance/evasion  and corrective action taken thereon; (d) whether the Government has taken note of incidents of tax evasion in the guise of farm income, often used as a conduit for money laundering, if so, the details thereof; and (e)  whether  the  Government  proposes  to  inquire  into  the  matter,  if  so,  the  details

- thereof along with the efforts made by the Government to check such malpractices?

## ANSWER

## FINANCE MINISTER (SHRI ARUN JAITLEY)

(a) to (e): A Statement is laid on the Table of the House.

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## STATEMENT AS REFERRED TO IN REPLY TO PARAs (A) to (E) OF LOK SABHA STARRED QUESTION NO. *81 FOR ANSWER ON 29 TH  APRIL, 2016 / 9 TH VAISAKHA, 1938 (SAKA) REGARDING TAX EVASION

(a): No, Madam.

(b): Periodic review of the Government's mechanism for detecting tax evasion is an ongoing process. In recent times, the Government has taken several effective steps, both by way of policy-level initiatives as well as through more effective enforcement action on the  ground,  to  tackle  tax  evasion/black  money.  These  steps  include  putting  in  place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of  information technology. Major initiatives taken by the Government in the recent past include - (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon'ble Supreme Court, (ii)  Enactment  of  a  comprehensive  new  law  -  'The  Black  Money  (Undisclosed  Foreign Income and Assets) and Imposition of Tax Act, 2015' - to specifically and more effectively deal with the issue of black money stashed away abroad which has come into force w.e.f. 01.07.2015,  (iii)  Introduction  of  the  Benami  Transactions  (Prohibition)  Amendment  Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable  confiscation  of  Benami  property  and  provide  for  prosecution,  (iv)  Proactively engaging with foreign governments to facilitate and enhance the exchange of information under  Double  Taxation  Avoidance  Agreements  (DTAAs)/Tax  Information  Exchange Agreements  (TIEAs)/Multilateral  Conventions,  (v)  According  high  priority  to  the  cases involving black money stashed away abroad for investigation and other follow-up actions including  prosecutions  in  appropriate  cases,  (vi)  While  focusing  upon  non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute  the  offenders  at  the  earliest  possible  for  credible  deterrence  against  tax evasion/black money, (vii) Initiation of the information technology based 'Project Insight' by  the  Income  Tax  Department  for  strengthening  the  non-intrusive  information  driven approach for improving tax compliance and effective utilization of available information, (viii) Proactively furthering global efforts to combat tax evasion/black money, inter alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of  Information and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA), (ix) Legislative measures including amendments in the Income-tax Act, 1961.

There is an established mechanism to detect evasion of Indirect tax cases through the two apex agencies, viz. Directorate General of Central Excise Intelligence (DGCEI) and the Directorate General of Revenue Intelligence (DGRI), who have been taking regular steps to improve anti-evasion and Anti-Smuggling performance. These include, strengthening  of  Intelligence  network,  identification  of  evasion  prone  commodities/ services,  issuing  Modus  Operandi  Circulars  regarding  evasion  of  Central  Excise, Customs duty & Service tax to field formations, coordination and sharing of information about tax evasion with other enforcement agencies like CEIB, Income Tax, Sales Tax, Enforcement Directorate and FIU. Besides, the Commissionerates are also involved in checking of tax evasion in their respective jurisdiction.

(c):  On  the basis of  Modus Operandi of tax evasion/smuggling noticed, as a corrective action, legal changes are made and circulars are issued to alert the field formations.

(d)  and  (e):  The  Income  Tax  Department  (ITD)  collects  information  pertaining  to agricultural income of the taxpayers, inter alia, through their Income Tax Returns, and the same along with the information collected from various other sources and the information available in the database of the ITD is taken into consideration in the analysis on various risk parameters for appropriate action under direct taxes law. Appropriate action against tax  evasion/black  money,  including  in  the  guise  of  agricultural  income,  is  an  on-going process. Such action under direct tax laws includes searches, surveys, enquiries, scrutiny assessments,  assessment  of  income,  levy  of  taxes, penalties, etc. and  filing of prosecution complaints before criminal courts, wherever applicable.

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