Corporate India using cloud computing to evade tax

Friday, 22 January 2010, 02:40 Hrs   |    16 Comments
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Corporate India using cloud computing to evade tax
New Delhi: Indian businessmen, following in the footsteps of multinational firms have started using web-based services to store incriminating data on foreign servers, keeping them out of reach of probe agencies, reports DNA. The concept, known as cloud computing, allows a customer to use distant servers to store and manage data. The service is cost-effective and increasingly becoming popular. However, the Finance Minister has formed a high-level committee to study the Information Technology Act (IT) and suggest amendments that will make it compulsory for firms and individuals to maintain mirror servers in India. According to DNA, secret Finance Ministry report on the subject says, "Enforcement agencies have been finding it difficult to retrieve data stored on servers outside India. Several Indian tax-evaders have also started using this method. Even if the data is obtained on request, it doesn't help investigation since it is not possible to cross-check the data which is stored on overseas servers." The committee, that is considering amendments to the IT Act includes top officials from the Directorate of Revenue Intelligence (DRI), Customs, Enforcement Directorate, Income-Tax, Serious Fraud Investigation Office and Intelligence Bureau. The Bangalore unit of the Directorate of Revenue Intelligence has written about the new concept in its report to the finance ministry. A senior DRI official in Bangalore said, "It's a major source of worry. Earlier, we used to find MNCs doing this. Now, we have found evidence to suggest that Indian businessmen are using web-based server facility to store data. This makes the task of curbing white collar fraud all the more difficult."