Amnesty plan to net black money
The Union finance ministry is considering a proposal to come out with a Voluntary Disclosure of Income Scheme (VDIS) to deal with black money.
People who will disclose assets under this might have to pay tax of 30 per cent plus a penalty, according to sources. “Under the scheme the income-tax
department will not go after people once they declare their assets, but other departments such as the Enforcement Directorate will continue with their investigations,” the sources said.
This new tax amnesty scheme follows a meeting at the finance ministry last month where the nation’s top industrialists suggested to finance minister Pranab Mukherjee to consider bringing in VDIS.
There was some expectation during the presentation of the last Union Budget that the government might announce an amnesty scheme for tax evaders. Prime Minister Manmohan Singh had said, however, that such schemes in the past had met with little success. “Amnesty schemes have been implemented in the past. I don’t think they have succeeded in providing a permanent cure for black money. We need to have systems reform in a holistic manner to deal with this menace,” Dr Singh had then said.
Sources in the income-tax department feel that the time is ripe for such a scheme now that the government has finalised treaties with a number of countries on getting information about black money stashed there.
In the past, the government had offered five voluntary disclosure of income schemes (VDIS) since 1951 to mop up black money. The last such scheme was in 1997-98, when the government got revenue of `10,000 crores. This was over 12 times the total collection from earlier such amnesty schemes. In the 1997-98 scheme, nearly 500,000 people filed returns on their undeclared inco-me, with the value of assets declared `33,697 crores.
This kind of scheme has often been offered in Western countries including the United States, Britain, France, Germany, Italy, Greece and Portugal, among others.
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