At least Rs 65,250 crore of undisclosed assets have been declared in the one-time compliance window, yielding Rs 29,362 crore in taxes, the government announced on Saturday. This is the biggest disclosure of black money in many decades of such schemes.
A total 64,275 declarants made disclosures of Rs 65,250 crore under the Income Declaration Scheme (IDS), Finance Minister Arun Jaitley told at a news conference. “Some disclosures have not been tabulated… This figure could be revised upward once the final tabulation is done,” he said.
WATCH VIDEO: Ahmedabad Businessman Under Scanner Who Declared Rs 13,000 Crore Under IDS
On the declarations compiled so far, the government will get Rs 29,362.5 crore in tax and penalty. Declarants can pay this amount in two instalments up to September 30, 2017. Half, or Rs 14,681.25 crore, will accrue in this fiscal.
The 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. Last year, under a similar scheme for foreign black money holders, 644 declarations of undisclosed foreign income and assets were received, and just about Rs 2,428 crore was collected in taxes.
Jaitley also said the government was taking steps to deal with the names that have figured in the Panama Papers as well as the HSBC list, both of which were reported by The Indian Express as part of its global investigation into tax evasion carried out under the aegis of the International Consortium of Investigative Journalists (ICIJ).
“In Panama cases, 250 references have been given to other countries and investigation is progressing in good pace. People who figured in the HSBC list, about Rs 8,000 crore assessment have been completed. 164 prosecutions have been filed,” Jaitley said.
“The names which ICIJ had released, in that about Rs 5,000 crore detection has happened and 55 cases prosecution have been filed.”
Earlier this year, the Panama Papers named 500 people including film actors and industrialists who have allegedly stashed money in offshore entities. ICIJ had published lists of entities holding offshore accounts in 2013 and 2015.
“We will maintain secrecy of these declarations,” Jaitley said of the IDS declarations, adding that the tax would accrue to the Consolidated Fund of India, and would be used for public welfare.
A total tax of Rs 9,760 crore was collected under the Voluntary Disclosure of Income Scheme (VIDS) that was brought when P Chidambaram was finance minister in 1997. “In 1997, the tax collected was Rs 9,760 crore,” Jaitley said, pointing out that while IDS is not an amnesty scheme, VDIS provided blanket amnesty. Disclosures under IDS are taxed at the rate of 45 per cent while the effective rate of tax in the 1997 scheme was in single digit.
The government, he said, did not want to give a person who hasn’t paid tax easier terms than one who has been honest in paying taxes, and so a 50 per cent penalty on the 30 per cent tax was added.
“It (VDIS) 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. “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 what course of action the Income-Tax Department would take against those who held black money, but had not declared it in the four-month window, Jaitley said the Department had 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”.
The I-T Department had remained open until midnight on the last day to facilitate filings.
Between 1951 and 1997, 10 amnesty schemes were announced to declare unaccounted money, most of which were misused. Dishonest taxpayers 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.