India tax authorities target non-compliance

Tue 3rd Sep 2013

The Indian Finance Ministry has started to target non-compliance on Indian Excise Tax and Service Tax.

Indian VAT authorities contact tax payers.

The two separate departments which manage the two taxes have been contacting all registered businesses that are non-compliant (e.g. Tax registered but not  up-to-date on returns).  In particular, the agencies are using information from banks and other financial institutions on potentially illegal or undeclared transactions.  The Suspicious Transaction Report, compiled by the Financial Intelligence Unit, is also being used.

The correspondence is inviting the tax payers to submit explanations and detailed analysis supporting their business transactions, and offers an opportunity to settle any undeclared taxes.  A tax amnesty was implemented in India last April.

It follows similar moves by the personal income tax authorities.