India’s parliamentary panel says tax dept should conduct evasion searches with caution

NEW DELHI – India’s tax department should handle search and seizure operations with “adequate caution” after carrying out due diligence to avoid harassment of honest taxpayers, a parliamentary committee on finance said in a report released on Thursday.

The panel of lawmakers said due diligence should be fully carried out before taking enforcement action to preempt legitimate complaints.

“The committee are of the view that while stepping up enforcement action against wilful or chronic evaders, honest taxpayers should not be alienated,” the report said.

The observations follow claims by opposition political parties that the Indian government has used enforcement agencies to target them and the government’s critics.

The income tax department, in its response to the panel, has said search and seizure actions are initiated only after preliminary probe and by gathering credible information on tax evasion, according to the report.

To make such operations effective for concealing income without harassment of taxpayers, timely instructions are issued by the tax department, it said.

For cases relating to indirect tax, including goods and services tax, officers have been sensitised about judicious use of power to make arrests, “keeping in mind ease of doing business.”

(Reporting by Nikunj Ohri)