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Secretariat employees using certificates issued by Staff Coop Society to evade Income Tax

The evasion by the staff was unearthed following an enquiry by Income Tax officers into the shortfall in tax.

Published: 31st January 2018 12:54 AM  |   Last Updated: 31st January 2018 02:51 AM   |  A+A-

The Kerala Secretariat building in Thiruvananthapuram (File)

Express News Service

THIRUVANANTHAPURAM: In what appears to be a tacit understanding between a section of Secretariat employees and the Government Secretariat Staff Cooperative Society Ltd, many employees have claimed income tax exemption worth crores of rupees by producing housing loan certificates issued by the Society. The tax evasion was unearthed following Income Tax officers’ enquiry into the shortfall in tax.

The IT sleuths found some employees produced loan certificates - issued by the Society (Reg No 2620), controlled by the pro-Left Kerala Secretariat Employees Association - to claim tax exemptions.
Express has accessed copies of certificates issued by the Society. Given the fact that there are over 4,000 employees in the Secretariat, the volume of tax evasion could come to a huge amount.

IT officers suspect fraud worth crores of rupees in the last six to seven years. The Income Tax Department has asked the Joint Secretary (Accounts), Administrative  Secretariat to produce copies of form 16, income tax computation forms submitted by those employees who have claimed tax exemption.

In case of the deduction claimed, those employees will have to furnish supporting documents for housing loan - both Interest and Principal amount. The Deputy Commissioner, Income Tax Department, has issued a notice demanding employees to produce a copy of the building tax, receipt and bank certificate regarding the purpose of loan taken. The employees will have to produce proof on the ground on which the deductions were allowed.

Meanwhile, KK Haridasan, secretary of the Government Secretariat Staff Cooperative Society told Express the Society has no responsibility to ensure the particular loan taken by the member is used for construction or repair of the house.

“As per our bylaw, we have provisions to grant loan for constructing a house. The loan is granted under the Society Loan and Contingency Loan category. But the employees may be giving the application for house construction, purchase or repair,” he said.

On asked whether it was proper to claim tax exemption using this housing loan, he said it was not the society’s responsibility to ensure that employees utilise the loan for the same purpose. He further admitted that no documents are sought to ensure that the loan is actually meant for house construction purpose.
“But we will issue a certificate on their request as their original application for the loan is for housing purpose,” he clarified.

Following the Income Tax Department’s query,  the General Administrations (Accounts) has issued a notice to employees to submit details of the bank from where the loan was obtained and whether the loan was availed from the Staff Cooperative Society (Register No.2620).

It has also been asked to clarify whether the amount was utilised for the purchase of new house, construction of house, renovation or repair. The employees were asked to submit the details before January 17. In case of non-filing of details, the shortfall in tax with interest will be levied from the employee’s January salary.

Huge evasion likely

The IT sleuths found some employees produced loan certificates - issued by the Society (Reg No 2620), controlled by the pro-Left Kerala Secretariat Employees Association - to claim tax exemptions. Given the fact that there are over 4,000 employees, the volume of tax evasion could come to a huge amount



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