Defaults on payment of service tax, excise and customs duty could result in stiff penalties and even imprisonment. While finance minister P Chidambaram has promised a non adversarial tax administration in his speech, the Budget 2013-14 has proposed strict measures against tax evaders.

The punishments are toughest for service tax evaders. The Budget has proposed to introduce Section 91 that would empower a commissioner of central excise to arrest a person for offences such as non-payment of collected service tax.

It also seeks to increase maximum term of imprisonment to seven years from three years in cases where service tax of over Rs 50 lakh was collected but not deposited within six months.

In cases of customs and excise duty, the Budget fineprint further reveals that though an appellate tribunal can extend the operation of stay for a further period of 185 days where the delay is not attributable to the assessee, it will be automatically vacated after a period of 365 days.

A senior government official said, “The aim of such measures is to improve tax compliance and prevent evasion. They should be seen along with schemes like the one time amnesty for service tax.”

For 2013-14, the finance ministry has Budgeted a 19 per cent rise in indirect tax collections at Rs 5,65,002 crore against the revised estimate of Rs 4,69,546 crore for the current fiscal. Changes in the duty structure for some items along with the proposed measures are expected to yield Rs 4,700 crore in indirect taxes next financial year.