(Source: Finance Ministry’s official Twitter handle)

Black Money Scheme: Rs 65,250 Crore Disclosed So Far, May Be Revised Upwards

The Income Declaration Scheme, 2016 which ended on September 30, has received declarations worth Rs 65,250 crore from 64,275 declarants, Finance Minister Arun Jaitley said in a media briefing on Saturday, citing a major surge in last minute disclosure. The figure is tentative and is likely to be revised upwards after final tabulation, he added.

"Some disclosures have not been tabulated and those have to be verified. So today's figure will be revised upwards. So far, 64,275 declarants have disclosed in the declaration an amount of Rs 65,250 crore. So approximately if we take average it comes to Rs 1 crore per declarant," Jaitley said.

"This figure could be revised upward once the final tabulation is done...The final figures post verification will be made public by the CBDT,”” Jaitley added.

'IDS Has Wider Scope’

The IDS, based on preliminary figures, suggests huge success, Mukesh Butani, managing partner at BMR Legal said in an email response.

Besides mobilisation of tax revenues, several thousand new tax payers will come in the tax net. The thrust of today’s press interview by the FM is clear - besides IDS, the government took the opportunity to communicate series of measures it has initiated to promote tax transparency and deliver on the promises of a clean administration.
Mukesh Butani, Managing Partner, BMR Legal

“It seems to be a great effort on the part of the government, especially in light of what they achieved from the Black Money Act, 2015,” said Alok Agrawal, Senior Director, Deloitte Haskins & Sells LLP.

The scope of the IDS scheme was much wider than the Black Money Act, and had a commendable outreach programme, he said, adding that comparing IDS with Black Money Act Scheme will not be “an apple to apple comparison”.

The declarations under IDS show that people are taking the government seriously when it says it will come after non-tax compliants, he said, adding that this will definitely, directly or indirectly, lead to better tax compliance, and eventually better tax collections.

Government Won’t Be Vindictive: Jaitley

Of the total income/assets declared, 45 percent would be collected by the government as tax and penalty.

The tax collected will go to the Consolidated Fund of India, and will be used collectively for public welfare, Jaitley said.

Under the Income Declaration Scheme, 2016 those possessing undisclosed assets were given a four-month window, from June 1 to September 30, to disclose such assets and pay 45 percent tax on the value of the asset as of June 1, 2016.

The tax rate under IDS is 15 percent higher than the prevailing tax rate of 30 percent, and includes a penalty of 7.5 percent and a surcharge of 7.5 percent.

"The department has no intention to be vindictive to any section of taxpayers or assesses but if the department finds that there is an evasion somewhere whatever normal activity they have to do they will do," Jaitley said.

IDS Vs 1997 Scheme

The finance minister said the IDS 2016 cannot be compared to an amnesty scheme like the Voluntary Disclosure of Income Scheme of 1997.

In 1997, the tax collected was Rs 9,760 crore, and the average per declarant under the 1997 scheme was Rs 7 lakh. Don’t compare the two schemes because the effective rate of taxation under this scheme is 45 percent, and the effective rate of tax under the 1997 scheme was close to single digit.
Arun Jaitley, Finance Minister

The IDS is fundamentally different from the voluntary scheme of 1997 which gave a kind of amnesty to tax payers, Butani agreed.

In fact, the IDS has been far more successful than the 1997 scheme, the chairperson of the CBDT told BloombergQuint.

Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015. a total of 638 declarations were received, declaring undisclosed foreign assets worth Rs 3,770 crore, according to a press release by the Central Board of Direct Taxes, dated October 1, 2015.

BloombergQuint
Stay Updated With Business News News On BloombergQuint