Third-party info to help govt track excise evasion

Transporters, banks and power utilities may have to share information about their corporate clientele with the excise department. The Central Board of Excise and Customs (CBEC) is formulating a third-party information system to tackle the rampant evasion in indirect taxes, including excise duty. The third-party information system is being designed on the lines of the annual information return (AIR) model for direct taxes. According to the proposal, which is being fine-tuned, requisite information will have to be divulged mandatorily. Government sources told ET that the CBEC plans to seek necessary legal changes to put in place such a mechanism. Companies that avail overdraft facility from banks have to submit details of opening and closing stock balance, according to the proposed system. The declaration submitted by such companies may have to be shared with the revenue authorities. Information on transportation charges paid by a company and its electricity bills could give the department an idea about its actual production and dispatches. Sources said information on production and stock position could then be tallied with the actual duty paid by the company. The information collected from third party sources would be compared with the details filed by the assessee to verify if taxes have been paid fully. The proposal was also discussed at the annual meeting of the chief commissioners of excise, Customs and service tax. Sources said the objective of creating such a system is to track evasion, particularly in excise duty, which has seen dismal growth in collections. Excise collections grew just 2.8% in the first quarter of the current fiscal to Rs 25,882 crore. Officials now collect information from various sources, including state tax departments informally. After creation of a formal system, this data will flow to the revenue department regularly. The AIR system has been successful and has been cited as one of the factors responsible for growth in direct tax collections. By Ms.Bobby Aanand, Metropolitan Jury.

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