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Tuesday, May 18, 1999

IT targets Indian cos for tax evasion

 
NEW DELHI, May 17: Having mopped up over Rs 500 crore from multinationals as income tax (IT) arrears, the IT department is now training its guns on large Indian corporate houses to detect evasion of tax deduction at source (TDS).

Besides, several other leading Indian corporate houses are being targeted. However, the officials refused to divulge amount of tax evasion that has been detected.

As part of its drive against MNCs, the department had mopped up a total of Rs 500 crore from about 60 multinationals, mostly Japanese. The amount has already been declared by the multinationals and paid-up as arrears. Some of the major companies detected on this count include Suzuki Motor Corporation, Bank of Tokyo-Mitsubishi, Sumitomo Corporation and Hyatt Hotels.

The IT department had been conducting surveys at the offices of most of the MNCs as part of its effort to plug the non-compliance by these companies in tax deduction at source (TDS).

The department has also unearthed that two South Korean chaebols -- LGElectronics and Samsung Electronics -- had allegedly evaded taxes to the tune of Rs two crore in their respective Indian operations. The department officials further stated that summons were issued against both the companies, following which the arrears were paid up.

It has been alleged that foreign officials working with the MNCs were getting two salaries -- one paid in Indian rupees and the other paid abroad. As per Indian income tax law, foreigners working in India have to file a declaration of any income earned by them abroad with their Indian employer. The Indian employer is then responsible for deducting tax at source on the total income of the foreign employee.

Meanwhile, Suzuki Motor Company (SMC) officials and nominees in Maruti Udyog Limited (MUL) have also been evading taxes to the tune of about Rs 100 crore.

The official stated that the IT departments of Delhi, Gurgaon and Faridabad are working jointly to crack down on major corporate houses who are evading taxes by not declaring the incomeof their foreign employees in Indian operations.

Regarding the investigations of Suzuki employees, the official said summons have already been issued to all senior directors, including MUL chairman Yoshio Saito on suspicion of tax evasion via under-declaration of their foreign income received in Japan. However, investigations against the company have hit a major stone wall with alleged ``high level intervention from the ministry''. The surveys were conducted under Section 133-A of the IT Act.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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