While startups are getting harassed, India’s taxman is turning a blind eye to the evading builders
- Around 95% of India’s
real estatebuilders and agents have never shared filed income taxreturns or shared their tax details with the Registrar of Companies (RoC).
- In addition, out of a sample of 840 companies that did have their PAN details listed, a mere 19% were regularly filing their tax returns.
- The report further stated that owing to a number of assessment errors by in companies’ tax returns, nearly ₹61 billion worth of taxes had been forfeited by the government.
Similarly, the average Joe in India is likely to get a tax notice for ridiculously small amounts, and get a rap for not linking the tax account, what is called the
Meanwhile, 95% of India’s real estate builders and agents have never shared filed income tax returns or shared their tax details with the Registrar of Companies (RoC), according to a report released in Parliament by the Comptroller and Auditor General - India’s federal auditing authority.
The report said that 51,760 firms that were assessed as part of an audit by the RoC were yet to furnish their PAN account details. A number of states like Bihar, Rajasthan and Gujarat did not have the details of a single real estate firm. In addition, out of a sample of 840 companies that did have their PAN details listed, a mere 19% were regularly filing their tax returns.
In order pay taxes, all companies and entities are required to have a Permanent Account Number (PAN). If their details are missing, it is likely that they could be skimping on tax payments. A cross verification with India’s tax authorities was not able to ascertain whether these companies were paying taxes or not.
The problems don’t end there. The report further stated that owing to a number of assessment errors by in companies’ tax returns, nearly ₹61 billion worth of taxes had been forfeited by the government.
The report concluded that there was a lack of coordination between the Income Tax (IT) Department and the RoC in this regard, suggesting that when a company applies for or has its PAN updated by the IT Dept, there should me a mechanism in place for the changes to reflect in the RoC.
In this regard, the Central Board of Direct Taxation is said to be working on a scheme to sync the operations of the RoC and the IT Department.
The real estate sector is no stranger to tax evasion and fraud. The surprising fact is that the tax department that keeps a tight leash on every other sector except the one that is is infamous as a haven for ill-gotten wealth in the country.
The Real Estate Regulation Act introduced in 2017 was supposed to bring in transparency in the sector and chase out the fly-by-night operators whose only intent was to launder money.
Nearly two years since, there are a number of collective action cases pending in India’s courts by disgruntled home-buyers who are yet to have their properties handed over to them by developers.
Last year, Jaypee Infratech, a large builder, commenced insolvency proceedings after a subsidiary failed to deliver over 20,000 units to customers.
While many tax-paying home buyers shuttle between courts, builders do not even need to submit PAN.
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