Black money declaration window closes today: Will it amass more tax than Chidambaram’s scheme?
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The NDA government’s Income Declaration Scheme (IDS), which opened a window for balck money hoarders to declare their ill-gotten wealth and come clean, is closing today.
The government, in order to further facilitate the filing of declarations, has extended the working hours of the Central Board of Direct Taxes (CBDT) until 8 pm on Thursday and Wednesday. The Income Tax Department offices will remain open all over the country until the midnight today.
Here’s a low down on the NDA government’s ambitious scheme aimed at battling black money:
What is the scheme all about?
The scheme, which came into effect for a period of four months starting from June 1 this year, was announced by the government with an aim of bringing out black money from the domestic economy. Those who declare their un-taxed wealth under the scheme can make their payments as follows:
i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30 November 2016;
ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31 March 2017;
iii) the balance amount to be paid on or before 30 September 2017.
The time for making payments was extended considering the practical difficulties of the stakeholders, who feared they may have to resort to distress sale of assets.
Penalty against the tax evaders or those people do not declare their deposits and assets under the IDS would be 100 percent to 300 percent, besides jail terms ranging from three months to seven years, depending upon the severity of the fault and laxity.
The government hopes to collect taxes worth Rs 50,000 crore and declaration worth Rs 1 lakh crore.
How is the government facilitating income declaration?
The CBDT is leaving no stone unturned to ensure maximum declarations under the window.
The government has assured people that the information declared under the scheme would be kept confidential and not shared with any authority.
Further, the payments made under the scheme shall neither be reflected in the annual statement, which is the consolidated tax statement, nor can it be viewed by the assessing officer in the Online Tax Accounting System (OLTAS) of the department in the interest of confidentiality.
The I-T department has been directed to accept declarations without PAN under the black money compliance window, but ensure that the unique number is later obtained by the entity concerned.
The Central Board of Direct Taxes (CBDT) has asked tax sleuths to ask such declarants to attach a separate application in the IDS form for allotment of a fresh PAN to them quickly.
The decision was notified by CBDT as some field offices brought to its notice that they were encountering “few cases” where an entity wanted to make a declaration of black money under IDS, but had no PAN.
The extension of date to make payments was also part of this effort.
Separately, the Reserve Bank of India has instructed banks to accept cash deposits at the counter from people declaring unaccounted wealth under the scheme.
What are the criticisms against the scheme?
As the IDS deadline drew nearer, the I-T department started conducting raids across the country. Even the small businesses were not spared.
The opposition has accused the government of harassment.
Congress spokesperson Manish Tewari alleged that under the scheme, the total declaration made till 30 August was Rs 4,164 crore only and the total tax collected was only Rs 2,428 crore.
As against this, in 1997, the then United Front government’s voluntary disclosure of income scheme (VDIS), the total declaration made was Rs 33,000 crore and total tax collected Rs 10,000 crore. The scheme was devised by then finance minister P Chidambaram.
“if today we go to any trading hub in the country there are these horror stories of how the small trader, the honest businessman, the honest taxpayer is being literally coerced in order to make declaration to fulfil the target under this income declaration scheme,” Tewari said.
Will the scheme be a success?
The jury is still out. Media reports say the government hopes raise anywhere between Rs 35,000-50,000 crore from the scheme.
According to this Business Standard report, the declarations have picked up towards the close of the scheme, which the government has refused to extend.
The tax officials cited by the newspaper say that the scheme will be a success if the income declarations goes beyond Rs 50,000 crore. Even declarations worth Rs 40,000 crore is not bad, they say.
However, if, as the Congress alleged, the officials have been harassing the tax payers to meet targets, it may end up as a failure and is likely to backfire.