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We dare govt to publish names of big loan defaulters

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[dropcap]A[/dropcap]s of now, the Income Tax department has published a list of 64 defaulter entities on their website. One can see and access this list on this web page of the department. It’s good that the government has started the practice of publishing and, thus, shaming tax defaulters, but it raises some questions.

Are these cases genuine, creating a positive image of the Income Tax department officials and their style of functioning?

Why isn’t the department also publishing the reason of default and amount of interest and penalty levied therein?

If the government is so determined, why can’t they publish the names of big loan defaulters who are squatting on public money?

Why is the government giving names of big loan defaulters in closed envelopes?

If you look into the quality and quantity of cases, where a demand is raised by the department, you will be surprised to know the way the demands were raised. A few examples:

  1. While raising a demand, mostly they don’t consider Form 26AS; in a number of cases, they ignore the actual tax deposited by taxpayers.
  2. Even after replying to a demand notice or paying up the demanded amount, they don’t readily update their records.
  3. In numerous cases, they don’t try to understand a business process or transaction.
  4. In many cases, the law requires information or documents as per the satisfaction of Assessing Officer (AO). Nobody knows or explains the exact meaning of this “satisfaction”.
  5. Most of them are not clear about capital receipts and revenue receipts. They might ask you, for example, why the capital receipts are not routed through the profit and loss account or where the depreciation money is.

If we consider the load of taxes (both direct and indirect) an Indian citizen is paying approximately 30%-35% of his total income to the government and this excludes the Members of Parliament and Members of Legislative Assemblies. They have given immunity to them by arranging subsidised food and services at the cost of public money. Above all, they have also exempted their salaries from tax. Maybe they are a patriotic lot — more than our armed forces, scientists or teachers!

On the contrary, if we check the cases of big loan default, those are clear cases of money transactions with fixed terms and conditions. A majority of them have transferred the loan amount for their personal uses or for creating personal wealth. Vijay Mallya is a live example where our whole system was found napping. Even in cases of default, the whole banking community starts restructuring their loans in the name of national interest or public interest.

According to a recent article, till December 2015, bad loans to the tune of Rs 4.4 lakh crore, mostly from large corporate houses, has been declared so far. This is hard-earned public money, which these large companies have used with the full support of a few bankers and powerful politicians. Corporate tycoons with deep pockets have always found a way to drag banks to courtrooms across the country for years and thus delay the repayment process.

Some banks have started the naming and shaming activity, but those are for small or petty loans. One can check the names and photographs of such defaulters on any PSU bank’s notice board. The question is, why not big defaulters? Is someone afraid, or are they saving one another? One can check the reality of disbursement of Mudra loan with any bank, too.

Although the list above is a good beginning, the government must take a holistic approach while implementing the policy of transparency and consider all the facts and figures before publishing such data in public. They should also disclose the names of big loan defaulters as they have misused public money.

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Sandeep Sharma
Chartered accountant

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