Modi govt to sharpen plan for naming and shaming tax defaulters

Illustration by Ajay Mohanty
The tax department is looking at expanding the scope of naming and shaming of defaulters by sharing detailed data with banks, financial institutions and credit rating agencies, among others.

The move is being mulled as part of a broader strategy aimed at arrears recovery and litigation management.In the absence of tax amnesty or income disclosure schemes, which provided a buffer to the government last year, the Centre might have to rely on arrears recovery to meet tax collection target this fiscal year.

A committee has been constituted to recommend measures for expeditious recovery of tax arrears, currently at more than Rs 10 lakh crore. The report would be submitted to the chairman of Central Board of Direct Taxes (CBDT) by July 15.

“Various measures are being considered to recover outstanding dues, and widening the scope of naming and shaming is one such means being explored. The focus this year is going to be on arrears recovery and litigation management,” said a government official.

The seven-member panel will essentially study the broad categories of arrears and recommend class-specific measures for expeditious collection. The department has been naming and shaming income tax defaulters for the past few years. It has so far named 96 entities that have huge tax liabilities but cannot be traced. Last month, it published names of five entities owing more than Rs 10 crore in taxes, with their details, to seek information from public.

“The focus will now be on big-ticket recoveries within a short time,” said the official. The panel will classify cases based on how old they are and recommend policy changes. It will also see if some CBDT regions are prone to raise tax demands that remain uncollected for long. The CBDT met the direct tax collection target for the previous fiscal year, at Rs 8.47 crore, posting a 14.2 per cent growth over the year-ago period. 

The government had come out with two income declarations schemes last year, giving black money holders an opportunity to come clean by disclosing unaccounted income. These people had to pay taxes and penalties. The Income Declaration Scheme fetched the government close to Rs 12,000 crore last financial year. Another Rs 10,000 crore is expected this year, due to a staggered payment option in the disclosure schemes.

7-member panel to suggest steps for faster recovery of tax arrears

It will ...  
| review naming and shaming policy and explore expansion of scope of policy 
| study age profile of outstanding cases, suggest measures to clear older cases first
|  identify tax regions raising infructuous demands
|  recommend measures for larger recoveries in shorter time
|  categorise cases and recommend class-specific measures for expeditious collection

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