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August 22, 2020

Know what reward you get if you inform tax evasion to the Government

Know what reward you get if you inform tax evasion to the Government

Government functions with the help of the taxes collected from the citizens.  Tax evasion is the major field, were Government revenue is lost.  On account of non-payment of taxes by tax evaders, Government stands to lose revenue.

In order to restrict such illegal activities and to unearth tax evasion, Government also seeks the help of public.  In this regard Government has framed a scheme of rewards to “Informers” who help them in detection of tax evasion.

Certain guidelines are applicable to informers (who give information relating to assets, immovable properties of persons from whom arrears of duty, tax, fine, penalty are recoverable and the information results in the recovery of arrears) and also Government Servants who put in commendable efforts to effect recovery as per conditions specified therein.

GST informant reward scheme

The revenue department came out with a ‘GST informant reward scheme’ to check tax evasion by unscrupulous traders and businesses in 2018.

It was on the lines of similar schemes for excise and service tax, which were subsumed under the Goods and Services Tax (GST). Customs and Income Tax also have such informer reward schemes.

Know what reward you get if you inform tax evasion to the Government
Know what reward you get if you inform tax evasion to the Government

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As per the guidelines under the CGST Act, Customs Act, Central Excise Act, NDPS Act Service Tax provisions and Drawback Frauds or abuses of Export Promotion Schemes, rewards are granted to the informers and Government Servants in respect of cases of seizures made and/or infringements/evasion of duty or tax.

What do you mean by information?

Information is any useful message received from any person revealing fraudulent evasion of duty.  It is the message based on which the department officials conduct further enquiry and investigation.

Who is an informer?

Any person other than the Officers of GST who has the requisite information relating to evasion of duty is an informer.

What is the eligible reward amount?

An informer is given the reward if the information given is correct and the duty payable by the assessee is recovered.  Informers and Government Servants are eligible for reward up to 20% of the net sale-proceeds of the contraband goods seized and/or amount of duties/ Service Tax evaded plus amount of penalty levied and recovered.

In respect of cases of detection of drawback frauds or abuse of duty exemption schemes under various Export Promotion Schemes, the informers and government servants were eligible for reward up to 20% of recovery of drawback claimed fraudulently and/or recovery of duties evaded.

Final rewards, both to government servants and informers, are sanctioned only after conclusion of adjudication/appeal/revision proceedings, as well as closure of proceedings.

How is the eligible reward amount disposed? 

The eligible reward amount is up to 20% of the duty evasion detected and realised. It is also important to note that if any false information is given to the department, legal action can be initiated against the informer. The amount is disbursed in the following manner: 

  • Upto 25% of eligible reward amount after issue of Show Cause Notice.
  • Another 25% of eligible reward amount after adjudication of the case.
  • Balance of 50% of the eligible reward amount after conclusion of the appeal proceedings.

Rewards under other Acts

Currently, an informer to the Income Tax department can earn up to Rs 5 crore for providing information regarding black money stashed abroad. Under the benami transaction prohibition act, the informants can earn up to Rs 1 crore by providing information regarding benami transactions or property.

The Income Tax Informants Reward Scheme (ITI Reward scheme), 2018 introduced on 24 April 2018 rewards an informant for giving information on undisclosed foreign income or assets and information related to tax evasion under Black Money (undisclosed foreign income and assets) Act, 2015 and Imposition of Tax Act, 2015.

Another scheme, titled “Benami Transactions Informants Reward Scheme (BTI Reward Scheme), 2018″, aims to regulate the granting and the payment of a reward to an informant on benami properties.

Under the ITI Reward scheme, a person can get reward of up to Rs 5 crore for giving specific information about black money, whereas under BTI reward scheme, the reward is up to Rs1 crore.

However, if a person gives information under both the schemes, the total reward cannot exceed Rs 5 crore.

How is the eligible reward amount disposed? 

  • There are different reward slabs based on information provided and the value of the assets. The reward will be paid in two instalments—interim and final reward.
  • For instance, for a person providing information on undisclosed foreign income or assets, liable under the Black Money (undisclosed foreign income and assets) Act 2015, an interim reward of up to 3% of additional tax levied or Rs 50 lakh will be paid, while Rs 5 crore will be paid as the final reward after the case is over, adjusting for the previous payment as interim reward.
  • Before determining the reward, the tax department will also consider the accuracy and precision of information, extent of usefulness, assistance rendered by the informant, additional tax levied and realised, and the risk, trouble and expenses undertaken by the informant.

One should remember to take utmost caution before sharing any information. Furnishing false information is an offence and the informant can be subject to prosecution in that case.

If you have any information regarding Central Excise fraud or evasion, you can call on 011-26174191 or mail to add-dgcei@nic.in or submit following form. Get rewarded without any fear. Your identity including name and address will be kept absolutely confidential.

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Report Tax evasion in GST to Directorate General of Goods and Services Tax Intelligence (DGGI)

Report Tax Evasion in Maharashtra GST

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