While the sluggish performance of many Indian athletes at Rio may have left us disappointed, the Income Tax Department has certainly been on its toes this year—in peak form in fact. In the first seven months of this year alone, the IT Department has conducted around 148 raids, which is almost thrice the number of raids conducted last year during the same period. Not just that, the total assets seized during these raids has experienced a mammoth jump. In the 148 raids conducted, the IT Department has seized more than ₹330 crore of alleged black money in the form of cash, jewellery, and other assets. This figure stood at ₹102.5 crore in 2015 during the same period.
In the 148 raids conducted, the IT Department has seized more than ₹330 crore of alleged black money in the form of cash, jewellery, and other assets.
After some seriously busy months from January to July, the IT Department prepared an official report on raids conducted during these months. Apparently, it has beaten all the records of the past five years in terms of the number of raids conducted and booty seized. The Investigation directorate of Central Board of Direct Taxes (Investigation wing, CBDT) has further issued strict instructions to step up these actions to unearth instances of domestic black money and go into "all the usual and unusual sectors".
Who are the alleged offenders?
The IT Department has not targeted any sector in particular. Cases that made the news included jewellery shops in Zaveri bazaar in Mumbai (among many such jewellers and traders across Maharashtra), the former Electricity Minister of Tamil Nadu, the offices, and residences of an infrastructure company, a premiere ice cream parlour chain in Bhopal, hospitals in Hyderabad and Jalandhar, banks, finance companies, etc. No sector has been spared, but those considered worst hit by raids were construction, education, medical, pharmaceuticals and infrastructure sectors.
In an interesting departure from the norm, even khau-galli (food street) vendors have not been spared. One of the reasons why income tax collection has not been very effective in the past is because small traders and vendors with handsome earnings do not pay or pay very minimal taxes. The Income Tax Department too has not been very strict with them because of lack of information. But not anymore. Amongst the recent targets of IT raids were vada pav vendors, dosa wallas, jalebi stalls and other purveyors of treats in popular khau-gallis. These vendors deal in cash, so it is difficult to track them down even though many of them earn more than the average salaried person. Now, vendors who would have never even seen an income tax officer before, are now dealing with full-fledged raids.
Why a sudden rise in IT Raids?
There's no official reason for the increase in IT raids, but we can certainly speculate! As per law, IT raids are conducted on the basis of information. However, it's unlikely that the IT Department has suddenly started receiving information from different sources about different people from different sectors. Besides, the number of raids are substantially increasing as the due date of Income Declaration Scheme (IDS), 2016 is approaching (30 September). Also, the IDS scheme has not been able to do well even after spending a fortune on its marketing. So, if one connects the dots, the intent of the government seems quite clear—to generate fear in the minds of tax evaders who might then be propelled to declare their black money under the IDS scheme.
The intent of the government seems quite clear—to generate fear in the minds of tax evaders who might then be propelled to declare their black money...
However, the numbers of tax evaders in India are so huge that even an IT force 10 times larger than the current size would find it difficult to conduct raids on all of them. That was the very reason why IDS scheme was introduced in the first place.
Taxes are your contribution towards running the government, which in turn takes care of your security and ensures your comfort in the form of public amenities. Paying your taxes honestly is your bit of contribution to the process of nation building. While creating fear and panic amongst tax evaders to ensure their participation in the IDS scheme may be the intent of the IT Department, we think the IDS is a grand opportunity to come out safe from legal hassles in future. From a nation-building perspective, the IT Department's recent work is laudable and a step in the right direction.