Good performance of Income Disclosure Scheme,2016
The Centre’s move to mop up black money from the economy by giving taxpayers an official pardon to declare undisclosed past income by paying tax on it at an effective, slightly high rate of 45 per cent has yielded a surprisingly positive dividend.
What is IDS (Income Disclosure Scheme), 2016?
The scheme had provided a one-time opportunity to black money holders who had not paid full taxes in the past to come clean by declaring their domestic undisclosed income and assets by paying tax plus penalty at the rate of 45 per cent.
The CBDT removed the difficulties that had been expressed by those wanting to avail of the scheme, especially with respect to making the tax payment within a short span by agreeing to accept it in three installments, the last being in September 2017.
The declarants have been assured of absolute confidentiality. No Prosecution will be undertaken against declarants.
Evaluation of collection
The tax department is aware that Rs.65,250 crore is just the tip of the iceberg — it had sent seven lakh letters to suspected evaders based on information on about 90 lakh high-value transactions that took place without PAN card details.
The tax department must crack down on such evaders and spruce up its data-mining methods to expand the country’s shallow tax base.
While the department’s efforts have revealed undisclosed income of over Rs.58,000 crore in the last two and half years, and more is being pursued from tax havens where Indian holdings have come to light, all of this is akin to treating the symptoms without addressing the root cause.
If the Centre is serious about attacking India’s thriving black economy, it needs to be bold and, for starters, make electoral funding transparent, curb the misuse by the wealthy of tax-free income sops for farmers, and encourage cashless transactions.