To get 64,275 people and entities to declare undisclosed income in a country that does not have a culture of tax compliance is impressive, Revenue Secretary Hasmukh Adhia told The Sunday Express. The government did not start out with specific expectations, and only wanted to give an opportunity to people who had not declared their income correctly, to come clean, Adhia said.
The revenue secretary said 64,275 entities declaring Rs 65,250 crore — an average declaration of Rs 1 crore — was a “large sum”. “In the entire country, as per 2012-13 data that we have released, only 14 lakh Indians are in 30% slab. People with above Rs 1 crore income are even less. In view of that, to get 64,275 people is impressive, really,” Adhia said.
He pointed out that the 1997, Voluntary Disclosure of Income Scheme (VDIS) had produced an average Rs 7 lakh per
declarant, and that the Rs 56,378 crore recovered from searches over the last two-and-a-half years are separate from the disclosure announced on Saturday.
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The declarations, Adhia said, were “spread over the disclosure window”, but conceded that “in the last days, it
will be more”. “People were thinking there would be extension of the scheme. So, seven days before the deadline, we declared that there won’t be any extension. I tweeted too. We gave advertisements with a countdown of remaining days. Naturally, people were expecting ‘karenge aaram se’. But when we clearly declared that no more extension (would be given), then people came forward.”
Adhia declined to say how many people made declarations on the last day of the scheme, or reveal region-wise or
city-wise data. “All details of state-wise break-up circulating on WhatsApp is humbug,” he said. “Obviously, in
last one week there will be more filing… In India, generally, people are sloppy, you know. Jo karna hai last din
On the assessment of around Rs 8,000 crore in the so-called HSBC list, Adhia said: “We got the list from one
foreign government and based on it, we did the inquiry. Out of that we have slapped notices of Rs 8,000 crore and
we have prosecuted (around 164) people. HSBC amount is substantial because number of accounts (175 cases) are not much. Those account-holders who proved themselves as NRIs, we could not do anything to them. FM has given
information of the follow-up of the first expose of The Indian Express in 2013, too. We have detected Rs 5,000
crore of undisclosed money in foreign accounts, and filed 55 cases against them.”
On the Panama Papers expose, Adhia said, “In the case of the Panama Papers we have information only about the
companies and their directors. That’s all. The expose of The Indian Express was all about the companies.
“What we did is that on the basis of the name of directors and their companies, we linked it to the PAN card of all
the directors named in Panama Papers. We asked them, ‘Do you own these companies?’ Many people said the companies don’t belong to them, some said they have closed those companies. Some said they are NRIs. Some people have owned it up. We have asked them to furnish their bank transactions. We have written to concerned countries to give the details of their bank transactions. We have made 250 references to other countries asking for details of bank accounts.”
In 2013, 2015 and 2016, The Indian Express partnered with the Washington-based International Consortium of Investigative Journalists (ICIJ) in global investigations referred to as “Off shore leaks”, “Swiss leaks”, and “Panama Papers”, publishing detailed information on companies registered in offshore tax havens and entities holding bank accounts overseas.
Asked if the huge data bank with the Finance Ministry could have yielded the government even more money, Adhia
said, “Well, I would think that data is already being used. You will remember that based on their high-value
transactions, some 7 lakh letters have already gone to people. We have written to each one of them that, ‘Dear Mr
so-and-so, here is some information about you. We don’t have your PAN number but would you like to link your PAN number with this transaction?’ We have given the window on our e-filing website where simply they can put the
reference number of our letter and a PAN number. That’s all they have to do. After this round we will compare that
high-value transaction with the tax returns they have filed. If there is any discrepancy then we will write to them
to pay tax. Quite a few have responded. Those who have got our letters and have not responded, they might have used IDS and may have paid tax on their high-value transaction that has been detected by us.”
The 45 per cent tax and penalty for the IDS was not too stiff, Adhia said.
“How can you give premium to the (tax) offenders? We were perfect. I don’t think our strategy was wrong,” he said.
“The normal tax is 30 per cent, plus little bit of surcharges, comes to 33 per cent. Tax offenders are paying only 12 per cent extra. That’s not much. We expect them to pay this amount. We don’t even know after how many years they are declaring their undisclosed income. We don’t know how they have used it all these years to make more money. The 2016 package was much better than 1997. In the last VDS, the rate was the same for normal people and for those who evaded tax. Also, those who declared undisclosed income were given benefit of valuation of 10 years. So, those who declared gold at the rate of 1987 got benefit. In 1987, gold price was around Rs 2,500 per 10 g, but in 1997 it was 4,700 per 10 g. So say, if I had Rs 10,000 of undeclared income, the valuation of it I will take of 1987. They paid the tax on half the price, at Rs 5,000. Due to this allowance, in 1997, lots of people declared gold. That was the big benefit given to non-compliant offenders. But we took care to see that offenders don’t get premium treatment. Ours wasn’t an immunity scheme. We wanted non-tax compliant people to comply with the law. After the end of the scheme, no immunity exists for people who may get caught.”