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Only 300 Tumble Out of Black Money Closet
Govt expecting more declarations at eleventh hour
Nearly 300 individuals have used a one-time compliance window for disclosing black money under a new law brought in by the National Democratic Alliance government by Wednesday evening, declaring around Rs.3,000 crore.The government expects more declarations before the deadline ends at midnight on Wednesday.
“About Rs.3,000 crore has been declared by around 300 people,“ a government official said. One person has reported Rs.200 crore, the highest declaration under the scheme, which allowed individuals to declare undisclosed foreign income or assets. The amount appeared small given the quantum of wealth Indians are supposed to hold abroad. Global Financial Integrity India, an international NGO, estimates an outflow of $44 billion from India every year during 2003-12. There is, however, no universally accepted figure for Indian money in overseas accounts.
Under the Voluntary Disclosure of Income Scheme (VDIS) of 1997, the government netted Rs.7,800 crore at a time the economy was much smaller. The total quantum of undeclared wealth was over Rs.26,000 crore, which was taxed at 30%. However, senior government officials have repeatedly maintained that the purpose of the law is to discourage illicit overseas outflows and not raise funds. In contrast, VDIS 1997 was an amnesty scheme and applied to both undeclared domestic as well as foreign income and assets.
“It is difficult for us to announce an amnesty scheme because in 1997 the government had filed an affidavit saying this would be the last one, tying the hands of future governments,“ a senior finance ministry official recently told ET. “We are talking about 500 people with foreign accounts,“ the official had said. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, provides a final opportunity to those with undeclared overseas assets.
TOTAL TAX OF 60%
Those coming clean will have to cough up 30% tax and 30% penalty (thus, a total tax of 60%) and avoid prosecution. The tax and the penalty can be paid by December 31.
The Central Board of Direct Taxes has created a special window headed by a senior income-tax official so that the declarations remain confidential.It has promised the information will be kept confidential as the declaration is covered under Section 138 of Income-Tax Act.
The board has launched an advertising campaign encouraging tax evaders to come clean while emphasising harsh consequences if they don't. “Failure to declare an undisclosed foreign asset will entail severe consequences under the Act, including higher penalty, prosecution, and may also result in forfeiture of assets under the Prevention of Money Laundering Act,“ the ministry had said.
The black money law makes hiding wealth overseas a criminal offence attracting up to 10 years of rigorous imprisonment and 120% tax, effectively leading to confiscation of the asset. The law is a cornerstone of the government's crackdown on black money.
The Economic Times, New Delhi, 1st Oct. 2015