New Delhi(web team): Finance Minister Arun Jaitley on Friday warned those who failed to use…
NEW DELHI(PTI): In the biggest ever black money disclosure, at least Rs 65,250 crore of undisclosed assets were declared in the one-time compliance window, yielding the government Rs 29,362 crore in taxes.
While the black money declarations will go up once all the online and manual filings of undisclosed assets filed at the end of the four-month window on September 30 are compiled, the government will get nearly Rs 14,700 crore or half of the due taxes, this fiscal. Announcing the declarations made under the Income Declaration Scheme (IDS), Finance Minister Arun Jaitley said 64,275 declarants disclosed an amount of Rs 65,250 crore.
“Some disclosures have not been tabulated… This figure could be revised upward once the final tabulation is done,” he told a news conference here.
Government had offered a one-time chance to holders of income and assets that had illegally escaped taxes, to come clean by paying a tax and penalty of 45 per cent. On the declarations compiled so far, the government will get Rs 29,362.5 crore in tax and penalty. The declarants can pay this amount in two instalments up to September 30, 2017. Half or Rs 14,681.25 crore will accrue this fiscal. Last year, under a similar scheme for foreign black money holders, 644 declarations of undisclosed foreign income and assets were received, and just Rs 2,428 crore was collected in taxes.
“We will maintain secrecy of these declarations,” Jaitley said, adding the tax would accrue to the Consolidated Fund of India and would be used for welfare of public. The average declaration per declarant comes to Rs 1 crore. A total tax of Rs 9,760 crore was collected under the Voluntary Income Disclosure Scheme (VIDS) amnesty scheme brought by the then Finance Minister P Chidambaram in 1997. “In 1997, the tax collected was Rs 9,760 crore,” Jaitley said, adding that VDIS and IDS cannot be compared as the two schemes are different.
While IDS is not an amnesty scheme, VDIS provided blanket amnesty, he said. Taxation under IDS is charged at the rate of 45 per cent while the effective rate of tax in the 1997 scheme was in single digit.
Jaitley also listed out the steps taken by the government to unearth unaccounted money in over two years, including Rs 56,378 crore during search operation and Rs 16,000 crore from non-filers of tax returns. The government, he said, did not want to give a person
who hasn’t paid tax easier term than one who has been honest in paying taxes and so a 50 per cent penalty of the 30 per cent tax was added. “It was 30 per cent tax, but the value of asset was taken not for 1997, but for 1987. So the effective rate of tax was single digit rate of tax. And this is a 45 per cent rate of tax. So the two schemes are entirely different,” he said. Refusing to draw a parallel between the two schemes, he said the two are different and the effective rates are also different.
“This kind of declaration is a positive step because more and more people in the higher tax income are wanting to become more and more tax compliant,” he said. Asked about what course of action the Income Tax Department would take against those holding black money but not declaring in the four-month window, Jaitley said the department has no intention of being vindictive. “But if the department finds that there is an evasion somewhere, whatever normal activity they have to do they will do,” he said.
The Finance Minister said India was not in general a tax compliant nation. “At 45 per cent tax, when the average declaration was one crore, it means there were no small traders.
“With so many people declaring money it shows significant number of people want to become tax compliant. It’s a very ‘good figure’ and if you take as part of all the steps that the government has taken cumulatively, these are very significant amounts,” he said.
The Income Tax Department had virtually burnt midnight oil to make the IDS a success by remaining open till midnight on the last day to facilitate filings. Like the foreign black money scheme, the Income Declaration Scheme 2016 is not an amnesty scheme. These schemes extended an opportunity to come clean by paying more than the normal tax. Between 1951 and 1997, 10 amnesty schemes were announced to declare unaccounted money, most of which were misused.
Dishonest tax payers got away in those schemes by paying lesser than normal taxes, with all immunities. Only two of the past schemes were seen as successful: the income declared under amnesty circular 1985/86 was Rs 10,778 crore, and under VDIS, 1997, Rs 33,000 crore. But the real value of the assets declared was double the value considered for tax purposes. Taxes were paid at less than 50 per cent of the normal rate, with zero interest and penalties.
The Remittances of Foreign Exchange and Investment in Foreign Exchange Bond (Immunities & Exemption) Act, 1991 saw about Rs 2,200 crore of income being declared, with zero taxes payable. The India Development Bonds, 1991, were also issued under this scheme, with subscribers enjoying immunity from declaring the source of income. They got 9 per cent tax-free interest on the 5-year bond. IDS 2016 provided opportunity to undeclared wealth holders to escape prosecution by paying 45 per cent tax, including a penalty of 7.5 per cent and surcharge of 7.5 per cent.