No state tax cover for VDIS assesses

MUMBAI, Dec 29: The Income Tax department has said that those companies which have made the requisite declarations under the Voluntary Disclosure of Income Scheme, (VDIS) and also paid the state taxes, will face no prosecution in future. However, if a company has not paid the state taxes like sales tax, and filed declarations under the VDIS, it will have to pay the additional taxes as it accrue to any State government.

The controversy started as the Maharashtra Sales Tax department asked various small and medium sized companies, which have already made declarations under the VDIS, to pay extra sales tax on the revised income/turnover declared to the IT department.

Sales tax department had sent notices to various companies after the department checked the revised books of accounts prepared by these companies to avail of the VDIS. The revised turnover obviously attracted sales tax. The income tax department said it has not passed on the information about the VDIS declarations to the Sales Tax department, as under law, it cannot pass on information regarding turnover/stock etc to any state tax department. The sales tax department’s fiat took many assesses by surprise as they were under the impression that they need not to pay state taxes.