Amnesty plan for domestic black money

In the first near amnesty like scheme since 1997, the government today offered domestic holders of undisclosed income and assets a one-time compliance opportunity to escape prosecution.

Refusing to call the compliance window an amnesty scheme, Finance Minister  Arun Jaitley in his Budget for 2016-17 announced a four month window beginning June 1 for holders of unaccounted wealth to come clean by paying 30 per cent tax plus a penalty of 7.5 per cent and a similar per centage of surcharge.

The total tax and penalty for domestic blackmoney holders is less than 60 per cent that the government had levied on foreign unaccounted asset holders last year.

The government had raised Rs 10,000 crore through an amnesty scheme in 1997.

"Our government is fully committed to remove black money from the economy," Jaitley said presenting the Budget in Lok Sabha. "Having given one opportunity for evaded income to be declared once, we would then like to focus all our resources for bringing people with black money to books."

The compliance window is proposed to be open from June 1 to September 30, 2016 and the payment can be made within two months of declaration.

The income declared in these declarations will enjoy immunity from any scrutiny or enquiry or any prosecution proceedings under the Income Tax Act or the Wealth Tax Act.

The declarations made under the scheme will also have immunity from the Benami Transaction (Prohibition) Act, 1988 subject to certain conditions.

A total of Rs 4,147 crore of undeclared wealth was declared during the 90-day foreign black money compliance window ending September 30, 2015. At 60 per cent tax (30 per cent tax and 30 per cent penalty), the government got a net Rs 2,500 crore from the declarations.

"I propose a limited period Compliance Window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions by paying tax at 30 per cent, and surcharge at 7.5 per cent and penalty at 7.5 per cent, which is a total of 45 per cent of the undisclosed income," Jaitley said.

The surcharge levied at 7.5 per cent of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy.

"There is monumental income tax law changes which I have made... Its not a VDIS (Voluntary Disclosure of Income Scheme) and it is not an amnesty," Jaitley later said.

This article was published in the Economic Times, to read please click here.