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Last Updated: Friday, 28 October 2005, 12:36 GMT 13:36 UK
Taxing text warns Diwali shoppers
Indian shopping mall
Big spenders will have to beware of the taxman
Indian tax payers shopping for Diwali, Hindu festival of lights, are getting a gentle reminder to pay their taxes.

Mobile phone users who run up a bill in excess of 1,000 rupees ($22) a month can expect to receive a text message from the finance ministry to pay up.

"Pay your taxes, file your returns and hold your head high. Happy Diwali," reads the message.

It is estimated that only about 3% of India's one billion-strong population pay income tax.

Non-filers of tax returns can't get away for long
Finance Minister P Chidambaram

"There are only 75,000 to 85,000 people with an income of one million rupees ($22,140) who pay taxes," Finance Minister P Chidambaram told journalists.

"This is unacceptable. There are far more people than this. My advice to people is file your return."

Mr Chidambaram also sounded a note of warning to tax dodgers.

"There is far more information with the tax department than before. Non-filers of tax returns can't get away for long."


Diwali is a time when most Indians loosen their purse strings, buying gifts and making major purchases such as buying a car, and the finance minister said big spenders would be watched.

People with credit card transactions of more than 200,000 rupees a year ($4,435) will be checked by the tax department to see if they have filed their taxes or not.

Similar checks will be run on people who make cash withdrawals of one million rupees ($22,179) or more, or who have bought mutual funds worth more than 200,000 rupees.

India has one of the most complicated tax systems in the world and complicated rules and red tape is often cited as one of the reasons why tax collection is low.

The country also has a flourishing underground economy where transactions are made in cash and no one pays any taxes.

The Indian government is keen on streamlining the tax system in an effort to generate more revenue to lower the country's alarming fiscal deficit.

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