Vittal says Lokpal Bill inadequate, proposes tax amnesty plan

Vittal claimed that he has taken a major initiative in rooting out corruption and wiping out black money from the economy. He said he has recently submitted a note to the Finance Ministry and the Departments of Central Excise and Direct Taxes, which gives details of a three-phase programme to root out black money. The note cites a recent survey which showed that the black money economy in India accounted for 40 per cent of the GDP. It mentions the film and real estate industries as areas where a lot of black money circulates.

Vittal’s plan incorporates an offer of a tax amnesty scheme, which he said will be radically different from the Voluntary Disclosure of Income Scheme (VDI). His note describes the last scheme as “the worst example where honest people were insulted and made to look like fools…”

Vittal’s latest scheme first envisages a three-month period where the government strengthened its legal framework by doing the following things: going in for a zero-exemption Income Tax period in which a flat rate of 20 per cent should be imposed; amendment of the Customs and Excise Act on the principal of zero discrimination; implementation of the long-pending Benami Transactions prohibition Act; implementation of the pending Corrupt Public Servants (Forfeiture Act) proposed by the Law Commission and the amendment of the Money Laundering Bill, which has been passed by the Lok Sabha, on lines suggested by the Central Vigilance Commission.

Following this, Vittal’s has proposed a three-month amnesty period, say from April to June this year, which would give an opportunity to black-money hoarders to come out in the open and after paying a nominal one per cent more than the flat rate of 20 per cent recommended for Income Tax.

The final phase of the drive to mop up black money will be to initiate action against black-money hoarders under the Benami Transactions Prohibition Act, Prevention of Money Laundering Act and the Corrupt Public Servants (Forfeiture of Property) Act.

Vittal said he has informed the Finance Ministry and its various departments that implementation of such a plan will “ensure that the amount of black money is substantially brought down if not totally eliminated. This will also avoid the psychological damage done by the last VDI scheme.”

Vittal said he was hopeful though he is yet to get a response from the Finance Ministry on his proposal. “What I have suggested is an amnesty scheme of sorts with a difference. It is amnesty integrated with strict application of laws and implementation of crucial pieces of legislation.”