Nab VAT evaders Public Accounts Committee (PAC) tells govt
KATHMANDU, APR 09 -
Amid massive uproar in Parliament and outside over evasion of value added tax (VAT) by big business houses and the Finance Minister’s reportedly going soft on evaders, the parliamentary Public Accounts Committee (PAC) on Friday instructed the government to take stringent action against them.
In the wake of the PAC’s directive, the Finance Ministry will find it hard to give any leeway to VAT evaders. Impatient at the slow progress in the multi-billion Unity Life International (ULI) probe, the parliamentary committee also asked the Finance Ministry and the Home Ministry to submit their reports within four days.
The PAC meeting on Friday instructed the Finance Ministry to take the severest action possible against the 480 firms identified as having dodged VAT and submit a progress report every 15 days.
According to the Inland Revenue Department (IRD), it has already completed a probe against 21 taxpayers out of the 38 investigated by the department and established that they used fake VAT bills worth Rs 2.27 billion.
It has already determined VAT worth Rs 654.1 million including fines and interest, according to a Finance Ministry letter sent to the PAC. As payment of income tax on the amount involved in the fake bills, they will have to pay Rs 1.21 billion.
Of the 14 cases investigated by Inland Revenue Offices (IROs), investigation into one has been completed and the IRO determined VAT of Rs 16 million and income tax liabilities of Rs 29 million, according to the ministry’s letter. The IRD said that it had already told the concerned Inland Revenue Offices to determine the income tax liabilities. According to the IRD, renowned businesses houses of the country are involved in the multi-billion fake VAT bill scam.
The IRD has initiated investigation into an additional 480 suspected VAT evasion cases. Reading out the decision, PAC chairman Ram Krishna Yadav told the Finance Ministry to take stringent and effective action against such tax evaders in the future. A senior IRD official said, “With the latest publicity of VAT evasion cases by using fake bills, there has been significant increase in tax compliance.”
There has been a rise in income tax by 29 percent, 19 percent in VAT and 20 percent in excise duty as of mid-March, according to IRD. “Earlier, the growth rate was sluggish,” said the IRD official.
Although PAC had told the ministry to submit details of tax evaders who used fake bills, the ministry responded it was unable to provide details as the VAT Act and the Income Tax Act required it to maintain secrecy and not disclose such details except to certain designated officials.
These acts allow only the finance minister, officials related to tax collection and the court to have access to such information.
Following the Finance Ministry’s response, PAC also notified it that keeping the names and other details of tax evaders secret would encourage them to continue committing crimes.
Fake bill users not only used the bills to evade tax but also to claim VAT refunds from the government without conducting any business transactions. The IRD found that Thalman Subedi, an auditor from Pokali, Okhaldhunga, siphoned off Rs 117 million from the government treasury using counterfeit bills. Subedi produced forged bills for imported raw materials and customs clearance documents for exports.
He misused the government’s VAT refund facility provided to exporters. As per the VAT refund facility, the VAT paid by an individual while importing or purchasing raw materials is refunded after the goods manufactured from those raw materials have been exported.
Subedi received the amount from the government on the pretext of exporting goods worth Rs 900 million through seven of his firms. As per the Finance Ministry’s letter, the government has determined the VAT of Rs 130 million against five such taxpayers. “This amount is, however, exclusive of the amount to be paid by Subedi,” said a senior official of IRD. In order to address such practices, PAC directed the ministry to take action against government employees helping in fake exports and to submit the details every month.
With government agencies losing enthusiasm to take action against the culprits of the Unity Life International scheme, PAC directed the Finance Ministry and the Home Ministry to submit the probe report to it within the next four days. Following the order, the police issued arrest warrants against Unity kingpins chairman Kashiram Gurung and managing director Bishnu Bahadur Chhetri, among others. They are at large. Moreover, they have been mobilizing their agents to withdraw the arrest warrants. The Unity activists have been staging a sit-in in front of the head offices of the three major political parties.
With the Finance Ministry issuing letters to all the ministries to withhold the budget not spent as of March 27, the PAC told the Finance Ministry not to stop the expenditure on projects approved by Parliament while terming the circular an insult to it.
The ministry had instructed the ministries to withhold the unspent budget to manage funds for a supplementary budget. With the government already having decided to bring a full budget on May 3, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari has told PAC that he would not implement the circular.
Source: Kantipur
Amid massive uproar in Parliament and outside over evasion of value added tax (VAT) by big business houses and the Finance Minister’s reportedly going soft on evaders, the parliamentary Public Accounts Committee (PAC) on Friday instructed the government to take stringent action against them.
In the wake of the PAC’s directive, the Finance Ministry will find it hard to give any leeway to VAT evaders. Impatient at the slow progress in the multi-billion Unity Life International (ULI) probe, the parliamentary committee also asked the Finance Ministry and the Home Ministry to submit their reports within four days.
The PAC meeting on Friday instructed the Finance Ministry to take the severest action possible against the 480 firms identified as having dodged VAT and submit a progress report every 15 days.
According to the Inland Revenue Department (IRD), it has already completed a probe against 21 taxpayers out of the 38 investigated by the department and established that they used fake VAT bills worth Rs 2.27 billion.
It has already determined VAT worth Rs 654.1 million including fines and interest, according to a Finance Ministry letter sent to the PAC. As payment of income tax on the amount involved in the fake bills, they will have to pay Rs 1.21 billion.
Of the 14 cases investigated by Inland Revenue Offices (IROs), investigation into one has been completed and the IRO determined VAT of Rs 16 million and income tax liabilities of Rs 29 million, according to the ministry’s letter. The IRD said that it had already told the concerned Inland Revenue Offices to determine the income tax liabilities. According to the IRD, renowned businesses houses of the country are involved in the multi-billion fake VAT bill scam.
The IRD has initiated investigation into an additional 480 suspected VAT evasion cases. Reading out the decision, PAC chairman Ram Krishna Yadav told the Finance Ministry to take stringent and effective action against such tax evaders in the future. A senior IRD official said, “With the latest publicity of VAT evasion cases by using fake bills, there has been significant increase in tax compliance.”
There has been a rise in income tax by 29 percent, 19 percent in VAT and 20 percent in excise duty as of mid-March, according to IRD. “Earlier, the growth rate was sluggish,” said the IRD official.
Although PAC had told the ministry to submit details of tax evaders who used fake bills, the ministry responded it was unable to provide details as the VAT Act and the Income Tax Act required it to maintain secrecy and not disclose such details except to certain designated officials.
These acts allow only the finance minister, officials related to tax collection and the court to have access to such information.
Following the Finance Ministry’s response, PAC also notified it that keeping the names and other details of tax evaders secret would encourage them to continue committing crimes.
Fake bill users not only used the bills to evade tax but also to claim VAT refunds from the government without conducting any business transactions. The IRD found that Thalman Subedi, an auditor from Pokali, Okhaldhunga, siphoned off Rs 117 million from the government treasury using counterfeit bills. Subedi produced forged bills for imported raw materials and customs clearance documents for exports.
He misused the government’s VAT refund facility provided to exporters. As per the VAT refund facility, the VAT paid by an individual while importing or purchasing raw materials is refunded after the goods manufactured from those raw materials have been exported.
Subedi received the amount from the government on the pretext of exporting goods worth Rs 900 million through seven of his firms. As per the Finance Ministry’s letter, the government has determined the VAT of Rs 130 million against five such taxpayers. “This amount is, however, exclusive of the amount to be paid by Subedi,” said a senior official of IRD. In order to address such practices, PAC directed the ministry to take action against government employees helping in fake exports and to submit the details every month.
With government agencies losing enthusiasm to take action against the culprits of the Unity Life International scheme, PAC directed the Finance Ministry and the Home Ministry to submit the probe report to it within the next four days. Following the order, the police issued arrest warrants against Unity kingpins chairman Kashiram Gurung and managing director Bishnu Bahadur Chhetri, among others. They are at large. Moreover, they have been mobilizing their agents to withdraw the arrest warrants. The Unity activists have been staging a sit-in in front of the head offices of the three major political parties.
With the Finance Ministry issuing letters to all the ministries to withhold the budget not spent as of March 27, the PAC told the Finance Ministry not to stop the expenditure on projects approved by Parliament while terming the circular an insult to it.
The ministry had instructed the ministries to withhold the unspent budget to manage funds for a supplementary budget. With the government already having decided to bring a full budget on May 3, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari has told PAC that he would not implement the circular.
Source: Kantipur
