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| Black Money and Tax Laws: Four Month-Window to declare | | | Ravinder Jalali
Government of India has come with Income Declaration Scheme, 2016 with effect from Ist June 2016, giving one time opportunity to all persons who have not declared their income correctly during financial year 15-16 and earlier to come forward and declare such unaccounted income. While dealing with the black money the Govt. has to ensure justice is done to the honest payer who pays taxes regularly with out waiting for the notice to be served upon them. The honest tax payer feels being cheated by the Govt. for paying the tax regularly and thinks that if he or she would have defaulted in payment of taxes for 8 to 9 years and then would have entered into settlement with the government by paying a lump sum penalty which will be more beneficial than paying taxes regularly. If this continues, it will vitiate the tax collection atmosphere in the country and there will be more defaults in future and the people will wait for another amnesty because every time government warns that it is the final but subsequently floats one more amnesty scheme.
Let me remind the people, that two years back in 2014, BJP party led by Narinder Modi fought the Lok Sabha elections on the plank of wiping off corruption, which had eaten the vitals of our socio-economic fabric of our country. Almost for about 1-2 years before lok sabha elections', country witnessed scam after scams which shook the confidence of common man in India. People were simply finding themselves at crossroads. This black money runs into hundreds of thousands of crores of rupees which are the hard earned money of Indians. The magnitude of black money, it was said; it would suffice the whole country, if we distribute Rupees fifteen lakhs per person. People of India trusted Modi led BJP, which became the main factor for the victory of NDA Govt. Naturally with power comes responsibility.
Now the Government of India announced ,a four-month window, for declaring domestic black money which will open on June 1 ,2016 and those opting to come clean by paying 45 per cent tax and penalty will not be subject to scrutiny and enquiry by the tax department. The Income Declaration Scheme, 2016 will remain in force till September 30 for filing of declarations and payments towards taxes, surcharge and penalty must be made latest by November 30, 2016. No scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations. The scheme will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16 or earlier.
Immunity from prosecution under the Income-tax Act and Wealth Tax Act is also provided along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of asset to actual owner within the period specified in the Rules.
The scheme is announced by the government with an aim to fish out black money from the domestic economy.
Under the Scheme, income as declared by the eligible persons, would be taxed at the rate of 30 per cent plus a 'Krishi Kalyan Cess' of 25 per cent on the taxes payable and a penalty at the rate of 25 per cent of the taxes payable, thereby totalling to 45 per cent of the income declared under the scheme. Declarations can be filed online. The window further declared that the declarations in the form of investment in assets, the fair market value of each such asset as on June 2016 will be reckoned as undisclosed income. Those assets specified in the declaration will be exempt from wealth tax.
The Govt. says that once the window closes and if any person has been found with black money will be booked and will face stringent provisions of laws. But it seems ridiculous. Many times in the past also, when the government came with such schemes, it always had a rider that it is the last time and those who fail to comply to disclose their black money will not be spared afterwards. But what actually happens? The government subsequently comes with another amnesty proposal there by dilutes the sanctity of the earlier warning that it is the last one. The evaders of the tax also know that it is not the last time. The Govt. will come with one more scheme of general amnesty where it will have more benefits for the defaulters.
Last year also, to unearth black money the government came with a law that provided for stringent penalties and jail term for failing to disclose overseas income. This law was in operation from July 1st July, 2015. After declaring assets they had time till December 31, 2015 to pay non-punitive tax and penalty of 30% each to escape stringent punishment including jail term.
The government has many times in past come with such general amnesty for tax evaders but it was never a final call. The fact of the matter is that under One Time Tax Compliance Window for tax evaders to un-earthen the Black Money which came to an end on 30th September, 15 after a period of 90 days, only Rs. 3770 crores had been declared. The numbers of disclosures who have disclosed were just 638. It is a tip of an iceberg. No doubt the Govt. was not happy as it was expected that sufficient quantum of Black Money will be declared. Tax experts have also opined that the response to compliance window was lukewarm, seeing the amount of recovery. The result was one more amnesty for defaulters.
Buy why general amnesty for these wilful defaulters? The basic question still remains unanswered so far, which is ringing in the ears of common man, why such a friendly approach and escape route to those who make disclosure in the 120-day compliance window from Ist June 2016. This means that they will be absolved of their liability by depositing just 45% of black money and there by not only savings up to 55 % of the black money but also giving legitimacy to the rest of money which he or she acquires after payment of such penalty and tax. He is not the real owner of money. Why he will be given general amnesty concession. He should have faced criminal proceedings in addition to imposition of penalty and taxes.
Any way let us wait and watch, to see how much to come through this compliance window. The taste of the pudding is in eating rather than seeing. However honest tax payers do not get any concession for their honesty and for paying taxes regularly where as the persistent defaulters are allowed benefits for their deviancy. Now it is the turn of Govt. to act and to act firmly and ruthlessly against the offenders and holders of black money as per Black Money law so that it will serve as a deterrent to other people but it needs a political will and national resolve, which will be the litmus test for the Govt. The progress in this regard is keenly watched by the all the citizens of India and will deepen the faith of the people of the country in the present Govt. under the leadership of Prime Minister Modi. Let the Govt. follow black money principle vigorously and holistically, there is no doubt why it can not be recovered. |
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