Signalling a muted response to its three-month compliance window, the government on Thursday said it received details of undisclosed foreign assets worth Rs 3,770 crore from 638 declarations till September 30, the deadline for availing the opportunity under its new black money law.
Asked if the amount disclosed was less than expected, Union Finance Minister Arun Jaitley told The Indian Express in Patna: “This is not a matter of assumption. It is a matter of fact.”
In an exclusive interview (page 19), Jaitley said: “There is undisclosed black money in various forms. There is a set of cases known as the HSBC cases where assessment has been made in most cases on income of Rs 6,500 crore and demands have been taken out. Then you have the Liechtenstein cases where black money is disclosed, we have taken action, assessments are completed and prosecution is going on. Even in the HSBC cases, prosecution cases have been filed.”
Jaitley added: “Now under the new black money law, this is the third set of cases where we gave the compliance window where 638 people have come and said ‘I have foreign assets’… They will be assessed accordingly and these people can sleep, by and large, in peace now. Over and above, if somebody is found having black money abroad and we have evidence against him, then he will now face the new law. He will have to pay tax of 30 per cent plus 90 per cent penalty. A total of 120 per cent tax and penalty and the whole thing will be confiscated and he will be liable for prosecution which may have 10 years of imprisonment.”
Prime Minister Narendra Modi had announced this Independence Day that the government had received undisclosed foreign assets declarations worth Rs 6,500 crore. On Thursday, experts attributed the tepid response to the much-publicised, one-time opportunity to concerns that the information provided may not remain confidential or that it may be used by investigative agencies to probe inter-related transactions.
What also contributed to the lacklustre response was the issue of “insufficient time”, they said. The last set of clarifications on the new law was issued only on Monday, leaving several points open to interpretation, experts said.
The disclosed amount announced by the Government translate into an average of a measly Rs 6 crore per declarant, lending credence to the belief that most of the big evaders have chosen not to comply.
Under the provisions of the Act, the declarants were required to pay 60 per cent penalty and tax on the amount by December 31, which was also seen as being too steep. The Government can now expect to rake in tax worth over Rs 2,200 crore on the amount declared. “These figures are subject to final reconciliation. The e-filing portal was also open till midnight to receive the declarations,” the Central Board of Direct Taxes (CBDT) said in a statement.
The window was provided to tax evaders under the new law — Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 — wherein they were required to pay a penalty and tax of 30 per cent each in return for an assurance of being spared penalties and prosecution.
However, the anticipated last-minute rush did not materialise. “The response has been muted because the time period was too short and insufficient. The kind of information the department was seeking takes time to be collected. By the time the third FAQ came, it was already time for the scheme to end. The other major reason for people backing out was that due to inter-related transactions, some people involved may have not wanted the same thing as those who wanted to declare,” said Krishan Malhotra, tax head, Amarchand Mangaldas.
“Lack of trust in respect to keeping the information strictly confidential, onerous disclosures and valuation rules and insufficient time given to taxpayers have contributed to this,” said Amit Maheshwari, managing partner, Ashok Maheshwary & Associates.
Jaitley, meanwhile, said that the Government will now scale up its efforts to curb the generation of illegal money abroad — and even in India.
“Now more stringent provisions will apply. So, now those who have not declared their assets abroad will face new law. Then, there are yet another… category of people who have domestic black money. We are taking a series of measures to curtail the use of black money,” Jaitley said.
Asked to compare the current effort with a similar scheme nearly a decade ago, Jaitley said: “I am sorry you are comparing apples and oranges. Amnesty was with regard to domestic black money… The quantum of domestic black money can be entirely different than what is stashed abroad. I will go strictly as per law.”
Asked about the response to the window, a CBDT official said the target was not to generate revenue from the scheme but give an opportunity to people before the act is enforced strictly.
The Black Money Act was enacted to deal with the menace of illegal wealth stashed abroad and the current scheme was limited to targeting undeclared foreign assets.
The Government had first declared a Voluntary Income Disclosure Scheme (VDIS) in 1951 wherein evaders could intimate the income tax officer and pay tax with immunity from penalty or prosecution. The scheme saw a disclosure of Rs 70 crore and tax worth Rs 11 crore.
Similar schemes were launched in 1965, 1975 and 1997. Except for the VDIS scheme of 1997, which was announced by the then finance minister P Chidambaram and saw a declaration of over Rs 33,000 crore, all other schemes fizzled out due to high rate of penalties and the fear of prosecution despite assurances from the Government.
Source: Indian Express