New Delhi, October 13: To bring black money and send it to the pocket of a common man was the pre-electoral promise of the present government and it seems the whole of IDS 2016 was planted to fill the dig and attain the desired political mileage.
The fair and lovely scheme that simply converted black money into white, did not serve any purpose for the community, whatsoever.
While Finance Minister Arun Jaitely have been overwhelmed with the response of IDS 2016 that fetched Rs 65,250 crore from 64275 black money declarations, the income declaration scheme of 2016 is a big failure.
Government saw black money!
After both the budgets FM Jaitley brought in Amnesty Scheme to collect black money. This year it was the Income Declaration Scheme and last year it was the Black Money Undisclosed Foreign Income and Assets and Imposition of Tax Act 2015.
It is enough to prove that Jaitely is a fan of amnesty schemes and smelling the fish, government wished to collect incessant tax funds. The last such scheme was introduced by P Chidambaram in 1997, VDIS.
Even in 2014, when the government came to power it set up a SIT, followed by NIPFP, NIFM and NCAER on Black Money.
More than 99% of black money is still there!
The estimated black money is pegged at 60 to 70 percent of the GDP.
Almost twenty years back VDIS 1997 unearthed black money to the tune 0.77% of the GDP. While the current Income Declaration Scheme of 2016 has unearthed black money to the tune of 0.47%. In a span of almost twenty years the percentage of black money unearthed has gone down, which is certainly a false claim.
Are there only 64,275 Black Money holders in the country?
There are about 22 crore and 30 lakh PAN card holders in India. According to the last financial year figures about 4 crore 33 lakh people filed annual return with the Income Tax Department. Out of all these only about 64000 turned up to disclose black money.
Twenty years back, the number of declarations under VDIS 1997 was over 4 lakh. The number 65,000 under IDS 2016 is surprisingly short as data mining techniques are very precise now.
The total declarations under the VDIS were about Rs 33,000 crore, yielding a tax of some Rs. 10,000 crore. In real terms, adjusted for inflation, the IDS 2016 is lower than the 1997 VDIS mop up.
Though government could not cap enough declarations but the course of unleashing black money is questionable at the same time.
Why tax terrorism was spread by IT officials?
For the first time ever small shop keepers including eatery joints were targeted!
In Mumbai alone, about 50, including a well-known vada pav center in Thane, a dosa center in Ghatkopar, a sandwich center in Andheri and a jalebiwallah in south Mumbai were at the receiving end of the taxman. Also, about 100 surveys were conducted in Ahmedabad and eateries and well-known shops in New Delhi and Kolkata.
In the last fifteen days of the scheme it was mayhem on the streets. About 200 surveys were conducted by the Income Tax Department. 7 lakh enquiry letters were sent. People were coerced into coming out and declaring so how can this be disclosure? It is simple tax evasion where normal penalties should apply.
The Income Tax Department had identified about 1 lakh individuals who could be tax evaders. Now if the Income tax department was convinced that these individuals are tax defaulters why action was not taken? Why were they allowed to come under the IDS? This was done because they wanted to make IDS have a better success rate rather than punish black money hoarders. There were only 15% voluntary compliance, rest is all coercion.
Well this means that the figures of IDS 2016 are very well rigged.
Why government shied away from calling IDS 2016 an Amnesty scheme?
Tax amnesty can be defined as a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability relating to a previous tax period or periods and without fear of criminal prosecution.
IDS 2016 is true to all components of Tax Amnesty Scheme.
Section 271(1)(c) of the Income Tax Act, 1961, provides for a penalty of up to 300% of the tax sought to be evaded. Section 276C provides that in a case where there is willful tax evasion of an amount exceeding Rs. 100,000 the tax evader is faced with rigorous imprisonment for a term up to seven years and a fine. As long as these provisions are suspended under IDS, there is certainly an amnesty.
The government permitted paying tax in three installments. While 25 per cent of the tax is to be paid by November 2016 and March 2017 each, the remaining 50 per cent is to be paid by September 2017.
What do we expect now?
A study of the 12 black money disclosure schemes floated by the government since 1950 shows the additional revenue garnered has not compensated for this aggregate drop in growth rate. The mop- up window for the latest of those — Income Disclosure Scheme, 2016 — closed on September 30. It will be interesting to see when the tax receipts for the year are tabulated in the North Block, if history repeats itself.
For each of the scheme years, the income- tax ( I- T) department found that the actual pace of tax collections trailed the rate of growth for the previous years. The trend is the same, except for one of those 12 anti- black money schemes.
Almost 99% of the black money is still out there and the Income Tax Department would do well to go an unearth it rather than waste its time on making “Political Schemes” of the government work.