The finance ministry on Friday said the cable television service was prone to tax evasion. The ministry has alerted both the direct and indirect tax departments to take necessary action. This includes survey operations by field staff to identify unregistered cable operators for payment of service tax.

The move is based on the assessments made by the ministry that several cable operators have been under-reporting their client base to evade tax. The introduction of the conditional access system is expected to put a brake on this menace.

The ministry said it had been able to increase the number of cable operators registered with the excise department by 60 per cent. In a drive conducted from April to September this year, the number of cable operators registered by the department has increased from 16,458 to 26,410.

The ministry said action was being taken to recover the tax dues with interest, and penalty from those who had been detected evading duty.

As a result, the service tax collected from cable operators has also shot up to Rs 22.14 crore (Rs 221.4 million). It was only Rs 8.48 crore (Rs 84.8 million) in 2002-03.

Simultaneously, the income tax department has also carried out several surveys and conducted enquiries against cable operators and have detected tax evasion.

It also said it could carry out searches and seizures to ensure that cable operators paid their income tax correctly.