India’s income tax raids


Income tax raids may seem like a case of anachronistic government overreach. However, they not only survive but even thrive in India. Reports are coming of coordinated raids on the offices of Ekta Kapoor, regarded as the prima donna of India’s television and movie production business, and her family members.

The offices of Balaji Telefilms, Kapoor’s publicly listed entertainment company, along with her family’s other properties, including their residences in Mumbai are reported to have been targeted by India’s Income Tax Department. The searches also include Kapoor’s father, Jeetendra, one of the most successful stars of Hindi cinema, and her brother Tushar, a moderately successful actor. Those are the facts as widely reported by the Indian media.

Income tax raids in India are elaborately hush-hush operations where each one is given a codename. During months of background work before a typical raid, the Income Tax Department determines which establishments to raid simultaneously in order to ensure that the target is caught unawares and has no time to hide or destroy evidence of tax evasion. Of course, it is not so uncommon that the news of impending raids is often leaked to the affected party in time for them to scrub any wrong-doing or clear out sackfuls of cash and jewelry.

Those who carry out such raids are officers of supposedly unimpeachable integrity. Not that such officials have a certain look about them but if you observe closely them they do have a certain look about them. I have been witness to a couple of such raids in the 1980s and 1990s. No, I was not the target. In my case, they would have had to plant evidence of misbegotten and accumulated wealth first and then raid. More often than not, the officer heading such raids used to be a middle-aged man wearing a basic color half-sleeved terry cotton shirt and pleated trousers. Strangely in both cases the man—and it used to be mostly men—heading the raiding team had had a fresh haircut, which was severely close-cropped at the back and side. It was as if they needed that to enhance the look of menacing sternness.

In those days, and perhaps even now too, there was a definite stigma attached to being raided. However, there was also a measure subtle admiration among the raided people’s neighbors because it meant they had made it in life. In one of the two raids that I chanced upon, it involved a mid-level businessman. Soon after the search and seizure concluded I saw him come out accompanied by the officers. He kept dusting imaginary dust off his shirt as if he felt soiled by the experience. He did not look up in case his eyes met with the curious neighborly onlookers.

Coming back to the raids on Ekta Kapoor, I have a fair idea what the officers might eventually find. Kapoor pioneered and profited from some of India’s most watched urban TV family dramas, where all their women actors generously lodged the parting of their hair with sindoor. The characters wear so much sindoor that Kapoor’s line producer had to have bought the red powder by the sackful. My suspicion is that the ongoing raids have mostly yielded sindoor whose quantity may be enough to smear every Indian woman’s parting everyday for the next 5000 years. (Humor and sarcasm).

One understands the motivations of such raids and the necessity to enforce the provisions of the income tax laws in the letter and spirit. That said, I am not entirely sure if those hoarding unaccounted wealth of any meaningful consequence for the national exchequer would do so by hiding it in their mattresses. Sure, one is bound to find some unaccounted wealth in almost all wealthy Indian homes. It is also important for a growing but shockingly iniquitous economy like India to make sure that people pay their fair share of taxes so that the less privileged too get too enjoy some semblance of a decent life. All those are good things, of course. But in terms of helping meet massive shortfalls in tax collection, such raids have only salutary effect.

Being part of an inherently showy profession the movie people do attract more attention of the tax authorities. In recent years, there has been a happy trend among top earning stars to pay impressively high advance income tax, which is calculated on the basis of their anticipated income. In fact, the Income Tax Department even releases a list of the country’s highest personal income tax payers, some of whom are movie stars. Whether or not the high earners of the movie and television industry would make an identifiable difference to the country’s overall tax receipts even if they paid every single cent owed is a matter of opinion. In so much as they generate news headlines and, hopefully, by implication, scare other bigger tax evaders into coughing up before being targeted, such raids do serve a symbolic purpose.

If tax raids are about the principle that everyone must pay their fair share, then they are laudable. My point they almost never lead to a sense of fair play among those who make a lot of money. It largely remains a you-evade-we-raid affair vulnerable to serious corruption.


About chutiumsulfate

South Asians can infer from my name what I am. View all posts by chutiumsulfate

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