Govt nets Rs 65,250-crore hidden wealth through Income Declaration Scheme

NEW DELHI,PRAVEENA SHARMA: The government has unearthed Rs 65,250 crore worth of undisclosed income and assets from 64,275 declarants under its four-month Income Declaration Scheme (IDS), which opened in June this year.

Arun Jaitley and Narendra Modi

The amount surpassed the government’s own expectation of Rs 40,000-50,000-crore and will earn a revenue of around Rs 30,000 crore at 45% of tax (30%), penalty (7.5%) and surcharge (7.5%) on fair market value to be levied on all declarations. The scheme closed Friday midnight. Finance Minister Arun Jaitley, who announced the outcome of the scheme on Saturday, said the figure could further shoot up after “tabulation” of declarations filed online and manually.

He said a large chunk of the disclosures was due to the search operations and raids carried out by the government; “Rs 56,378 crore undetected income has been uncovered through search operations”. An insider, on condition of anonymity, said the declaration shot up in the later phase of the scheme after the Income Tax (I-T) investigators went after businessmen of small and mid-sized ventures. “The way in which police go after criminals, they (I-T inspectors) went after income tax evaders (as criminals),” he said.

According to him, the response in the initial period of the scheme was too low and so the government had to step up its effort to push up the declaration numbers by “investing in conducting searches and raids”.

“They created such a fear psychosis among the small and medium businessmen that they were forced to declare their undisclosed income. The I-T sleuths would raid their homes and seal their offices. They were able to unearth a lot of cash with these people this way,” he said.

Giving an example, he said a lot of cash was allegedly found at the premise/home of a vada-pav outlet near Thane station.

Citing another case, he said around Rs 5 crore cash was found at a fafda-jalebi vendor’s home in Ghatkopar. Jaitley said the revenues under the scheme would be received by the Consolidated Fund of India and will be used for social security purposes. “Roughly, the declarations work out to Rs 1 crore per declarant. Some will be higher, some will be lower,” he said.

Unearthing black money was one of the major poll promise of Prime Minister Narendra Modi. He was quick to applaud those who choose to come clean in a tweet, terming it as a great “contribution towards transparency and growth of the economy”. “I compliment all those who chose to be tax compliant in IDS-2016. This is a great contribution towards transparency & growth of the economy,” Modi tweeted.

He also patted Revenue Secretary Hasmukh Adhia’s back for his efforts in driving the scheme to success.

The bureaucrat tweeted back saying: “I am grateful to Hon PM@narendramodi for calling me up to congratulate the team of Revenue Deptt and CBDT for success of IDS 2016. I want to send PM’s compliments to chairperson and all officers of Income Tax Department. My sincere thanks to them for their hard work”. A statement issued by the finance ministry said wide awareness exercise, which involved appeal by Modi, personal address by Jaitley to stakeholder at many stations and over 5,500 public meetings conducted by the tax department in various cities, led to the “tremendous” response to the scheme.

“These steps resulted in a tremendous response from the general public, especially in the last two months,” said the ministry statement. To assuage fears of witch-hunting of declarants by the I-T department, the government has promised “absolute confidentiality” of the declaration made under the scheme.

Even though the declaration amount under scheme is beyond what was expected, it is still way below the Voluntary Disclosure of Income Scheme (VDIS) of 1997, where defaulters were given the opportunity to disclose their income at the prevailing tax rate.

That scheme had seen over 3.5 lakh people come clean on their income worth Rs 78,000 crore.

Jaitley has always maintained that IDS was different from VDIS in that it was not an “amnesty” scheme as it penalises the defaulter. “In 1997, (under VDIS) the tax collected was Rs 9,760 crore (as the effective tax rate was in single digit),” Jaitley said.

Posted by on October 2, 2016. Filed under Editorial. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.