India Inc angry over Centre’s crackdown

We have a very thin line between duty and harassment.

Update: 2019-08-01 20:27 GMT
Principal chief commissioner of income tax-AP and TS N. Sankaran said, The income tax collected in TS and AP for the financial year 2018-19 amounts to Rs 58,404 crore, against the Rs 31,762 crore collected in 2014-15. (Representational image)

NEW DELHI: The suicide of V.G. Siddhartha, under investigation by tax authorities, has inflamed anger towards the government among business leaders who feel it is going too far in its crackdown on fraud and tax evasion.

Drastic measures taken by the government include stringent action to enforce tax compliance, probes into bank lending practices and threatening auditors with five-year bans for alleged lapses in their work.

In particular the push by tax collectors has been labelled ‘tax terrorism’ by T.V. Mohandas Pai, an ex-Director of Infosys Ltd, even before the Coffee Day Enterprises founder disappeared.

But the income tax department has said it acted as per the law in its investigation of Siddhartha and the coffee chain, and its probe was based on credible evidence of transactions done in a concealed manner.

Former government officials, industry executives and their advisors, including lawyers, told Reuters that investigations conducted by Indian agencies and tax inspectors had often resulted in harassment for business leaders.

Kiran Mazumdar-Shaw, MD of Biocon Ltd, said she knew many industrialists who have been called in by Indian enforcement agencies but were made to wait for long periods before questioning began and subjected to “insulting kind of treatment.”

“People are made to wait for 24 hours, 12 hours, 16 hours. This is not some kind of inquisition. It cannot be treated like an inquisition,” she said. “Today every business person is made out to be as if there is something very crooked about them.”

Many government officials and business leaders say the government has been overzealous, making business leaders too fearful to invest and endangering the health of the economy.

In particular, they are concerned that enforcement agencies increasingly go after loan defaulters without differentiating between genuine business failures and corrupt practices.

“Any enforcement agency first looks at you as a crook,” said J.N. Gupta, a former Executive Director at Sebi, adding that the loss of Siddhartha’s life was a very sad moment but one that was giving India an opportunity to find out what had gone wrong with the system.

"We have a very thin line between duty and harassment. The enforcement agencies fail to realise that sometimes their zeal could be seen as harassment."
— Reuters

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