Income Disclosure Scheme pays off well
The Union Government can pat itself on the back for the success of the Income Disclosure Scheme (IDS). In the last few weeks, when the window for disclosure was open, there had been reports that the scheme was destined to end as a failure, with very few disclosures. Now we know that an amount in excess of Rs 65,000 crore within the stipulated time of four months has been disclosed. It is now time for the Modi Government to push for a final crackdown on the rest of the evaders. More such moves will make the ordinary citizens, who pay their taxes in time, feel good. The new law — Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, under which more than 600 disclosures were made by September 30, can bring more assets home, provided the Government maintains secrecy of the declarants. The defaulters who did not declare their black money abroad will now face up to 10 years of imprisonment and a total of 120 per cent penalty followed by confiscation of their assets. This should help discipline tax evaders taking the existing tax regime of the country for granted. It appears that most of the declarations were made at the last moment as black money holders realised that the Government was coming up with a new set of stringent laws.
In order to make the IDS more successful, the Government could have perhaps expanded the time-frame. The Central Board of Direct Taxes (CBDT), the nodal agency, required more time to collect information about the defaulters. Therefore, while launching such crucial initiatives, the Government must see to it that officials are able to do a detailed check on the type of investments made and the sources of income. There are still major evaders who have chosen not to divulge their assets. They will have to face the music, but punishment must be swift. The current IDS has made it clear that illegal money is no more safe. There are chances that the total amount of declarations may go up, once the final tabulations of both the online and manual filings are completed.
The Government of India had declared a Voluntary Disclosure of Income Scheme (VDIS) in 1951. later, such schemes were launched in 1965, 1975 and in 1997. But only the last VDIS of 1997 brought a substantial declaration of Rs 33,000 crore; the rest failed to generate confidence among the tax-payers. As one-time IDS, the money disclosed as on September 30 this year is supposed to be the biggest disclosure till date. The aim of the Modi Government was not merely to net revenue out of the undisclosed foreign assets but also to offer an opportunity to our tax-payers to disclose their income without any fear. The Prime Minister's repeated call for not to fear the taxman, has finally paid. This must be treated both as an opportunity and a challenge by the CBDT to devise its future course of action. The need of the hour is to generate confidence among the tax-payers and add to the tax-paying base. There is long way to go. We need more tax reforms to give a humane face to our ossified financial system.