Mop up what's due

BANGALORE: Why tax people to generate money for flood relief? Why not tap revenue due to the government?
Instead of getting taxed more, people can chip in by insisting on bills for every purchase which will indirectly help the commercial tax department collect its taxes from traders.
With the government proposing to increase sales tax and Value Added Tax (VAT), tackling tax evasion becomes critical.The department estimates that there's evasion to the tune of 20% and the major reason being consumers who don't insist on purchase bills. If the department creates public awareness about this issue and cracks down on traders, a minimum 10% increase in taxes can be achieved, that's almost Rs 2,000 crore with Rs 20,000 crore being the revenue target.
According to officials, major tax evaders are from sectors like gold, silver, diamond, plastic, plastic granules, hardware, electric goods, hosiery, readymade garments and utensils. In purchase of gold, silver and diamond, it's nearly always under-invoiced by the dealer. The department collects VAT on almost all commodities, sales tax on petrol and diesel, Central Sales Tax, entertainment tax, luxury tax, professional tax, agriculture income tax, betting tax and entry tax. But the big revenue earners are VAT and sales tax.
With organized retail sectors becoming big business as evident in supermarkets and malls, issuing bills is mandatory. "We don't have the habit of asking for bills and people need to be educated. VAT compliance is the worst in small cities compared to Bangalore and should be strictly monitored. Also, most imported items, like Chinese stuff, are traded without bills, which have a huge turnover but evade tax. I'd say that nearly 30% to 40% of sales happens without bills,'' says R C Purohit, industrialist.
Recycled bills
It's easy for the dealer to recycle his purchase bills and do the business without paying taxes due to the commercial tax department. If bills are issued, the transaction gets recorded and will curb under-invoicing.
The department also conducts `test purchases' -- a reality check on whether the dealer issues bills for purchases. A department man goes as a decoy with marked currency and makes a purchase. If the dealer doesn't give the bill and the moment he puts the cash into his box, officials swoop down on him. But since the area is vast, this exercise is not widespread.
"People can help the department get taxes by procuring bills for purchases. The government should take this up as a campaign,'' explained officials.
toiblr.reporter@timesgroup.com