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Post-VDIS, income tax raids launched in Goa

Sandesh Prabhudesai in Panaji

Goa did not score well in the Voluntary Disclosure of Income Scheme, the income tax amnesty programme. Perhaps it is to make amends for the low collections that Goa became the first state post-VDIS to go on the offensive against the tax evaders, by launching a raid on a politician-turned-real estate agent in the coastal village of Calangute.

Raiding the palatial bungalow worth Rs 4 million of Anthony Menezes, a member of the village panchayat (local council), last week, the income tax officials recovered documents worth Rs 150 million, including around 60 files of land agreements and property sale deeds. All his bank accounts as well as lockers are also frozen.

The coastal villages of Goa, of which Calangute is a prime attraction for foreign tourists, are today centres for all kinds of activities, ranging from hawala dealings of foreign exchange to drug trafficking. As a result, the ill-gotten wealth has led to a construction boom, which in turn has destroyed scenic beauty of the coast.

Menezes is involved in several real estate dealings besides running a security agency for all the hotels in the coastal areas. The income tax officials in Panaji now plan to continue such raids on those who refused to pay up under the VDIS.

Says Shyamsunder Keshkamat, assistant director of income tax investigation branch, "Besides people owning cellphones, investors in real estate market would also be targeted." The income tax office is believed to have prepared a list of all such people, who have reportedly invested black money into it.

Meanwhile, the VDIS fared badly in Goa not because the local income tax department took little effort but mainly because the state is well above the national average in terms of routine tax collections.

The greatest advantage Goa has is the Portuguese Civil Code, which remains in force, 36 years after the the state's liberation. Since 1994, the Income Tax Act has also taken cognisance of the Code to asses the family assets, which are equally divided among all the family members.

After getting benefit of the tax exemption slabs, the people have to pay very little towards income tax for their share of property as per the Communion de Bens and the amendment in the Income Tax Act.

Though the income tax officials in Panaji expected a good response from the builders, perhaps the crash in real estate market and liquidity crunch kept them away from making declarations. The fishing industry, surprisingly, is also missing from the VDIS list.

Besides people owning cell phones, a craze in the tourist state, the local income tax department now plans to crack down upon investors in the real estate, as most of the Gulf-based Goans and businessmen from the neighbouring states and Bombay are known to have invested their black money in Goa.

Collections at the Goa income tax office amount to around Rs 650 million with 3,600 declarations for an income of around Rs 2.05 billion. But hardly one third of it is Goa's share, since the Panaji-based income tax office also controls three districts in the neighbouring Karnataka state -- North Canara, Belgaum, and Bijapur, coming under Belgaum range.

Keshkamat points out that Goa has been topping the list in terms of normal tax collections. Against the national average of less than one per cent, the collections here are over five per cent, he adds.

The normal collection in Goa last year was Rs 1.45 billion compared to only Rs 300 million from the Belgaum range. This despite the fact that the size of each of the three districts in Karnataka is more than double that of Goa.