Undisclosed Income Tumbles: Tax Evasion Up?

A more than 30% drop in ‘undisclosed income’ unearthed by the income-tax (I-T) department in 2012-13 has got the government worried, amid concerns that big evaders may have escaped the net by underreporting actual earnings.

Official statistics reviewed by HT show that ‘undisclosed income’ – a broad measure of the earnings that taxmen unearth from individuals and firms following searches and raids — fell to Rs. 1,0291.61 crore in 2012-13 compared with Rs. 15,070.64 crore in the previous year.

The sharpest drop in such hidden income has been reported from two India’s largest tax collection centres — New Delhi and Mumbai — with both recording about 70% drop in undisclosed income in 2012-13 at between Rs. 947 crore and Rs. 1,089 crore respectively in 2012-13 compared with Rs. 3,728.33 crore and Rs. 3,510.70 crore in the previous year. 

These compare poorly with smaller centres such as Kolkata and Hyderabad where the amount of undisclosed income has gone up to Rs. 1,572.62 crore and Rs. 1,336 crore respectively in 2012-13, a jump of more than 40% and 50% respectively over the previous year.

The government said the number of searches conducted by Mumbai directorate was just 14 compared with 88 in Kolkata, 49 in Ahmedabad and 47 in Hyderabad.

Mumbai, the commercial capital, usually accounts for about a third of the I-T collection.

The finance ministry has urged the I-T department to increase collections.

“It is difficult to believe that business has gone down so bad to reflect the I-T department’s bad record since other centres are doing well. Bad business is bound to impact all centres,” said a source.

Hindustan Times, New Delhi, 02-12-2013