The real whistle-blowers and anonymous heroes of the Income Tax Department are its informants. It is often that the investigation officers receive veritable scoops from them. Once the tip-off is verified by the department, the I-T Department conducts raids on tax evaders.
The informers, who run a personal risk while passing on tips, are given cash rewards as a percentage of the tax evaded. But guess how long it takes for them to actually get the promised reward? In Gujarat, the wait could stretch as long as 10 years.
When three such informants finally get their prize money this June, their wait of more than a decade would end. These whistle-blowers were the key catalysts in identifying more than three major companies in Gujarat. The raids on them yielded over Rs 100 crore.
“In these three cases, the first tranche of Rs 1 lakh prize money was given to them years ago and now the rest Rs 14 lakh would be given to them. According to the procedure, the informers are immediately given Rs 1 lakh once their tip-off is verified and then the rest of the prize money is decided as a percentage of the tax evasion,” explains an Income-Tax official.
An Indian Revenue Service (IRS) officer at the Aaykar Bhavan, Gujarat, says, “Informants are our key source in conducting Income Tax raids. If we don’t pay them on time we often lose credibility and they stop sharing insights with us. Therefore, it is a big deal that we are finally paying them.”
Many Income Tax officials believe that a strong network of informers could help uncover huge Benami properties in Gujarat.
“In most cases, informants either forget that they gave us the scoop of an I-T raid, or they lose hope of receiving the prize money and in the worst cases, they go on public platforms to show their resentment towards the Income Tax department,” the IRS officer adds.
Reward For Informants
The informant gets a maximum interim award of Rs 10 lakh. But if the cash seized is over Rs 1 crore, the interim amount can be as high as Rs 15 lakh. The final reward will be 5 per cent of the tax liability and up to Rs 50 lakh.
An informer gets ₹1 lakh as an instant reward if the tip-off leads to tax recovery. The rest of the reward money – 10% of the total tax liability with a cap of ₹15 lakh – is subject to the final settlement of the case.
Does Income Tax Dept Discourage Tax Dept Informants?
“In a majority of the cases, where defaulters seek legal recourse, informants have to wait for years as final settlements take a long time to happen. Informants will not come forward to provide information on properties worth several crores when the incentive is so meagre and the process so complicated,” the IRS officer lamented.
Finding A Way Out
“We are aware of this loophole and our department is exploring ways to address the issue. The investigation takes time and here, the judiciary is also involved. But we understand that 10 years is a very long time and we are in the process to address this glitch in our system,” the officer says.