Amnesty plan for tax evaders

Amnesty plan for tax evaders

Representative image. (Photo/iStock)

With direct tax collection set to fall well short of the target, the Centre may announce a "voluntary disclosure of income scheme" for tax evaders and ask them to report their previously undeclared income to tax authorities, pay a one-time tax and penalty, without risk of prosecution.

The Narendra Modi government had earlier in 2016 announced such a scheme under the name of Income Disclosure Scheme, which resulted in the declaration of hidden assets worth Rs 65,000 crore.

This time around, the Centre expects to collect over Rs 50,000 crore, if the IDS is announced for income tax evaders with a charge of around 45% levied on the income and asset declared.

The scheme may be announced for tax evaded since 2014, the beginning of the first term of the Modi government.

"A number of wealthy Indians have still not declared their correct income and assets for the past many years for fear of being penalised," official sources told DH.

They said the scheme will provide an opportunity to income tax defaulters to avoid litigation and become compliant by declaring their income and wealth and paying a higher tax on them. It will also boost the Centre's direct tax revenues.

The Centre, which expects to collect Rs 13.35 lakh crore in direct taxes this year, has so far garnered only Rs 5.2 lakh crore. The net direct tax collection growth in the April-October period of 2019-20 has been less than 3% against a projected 17% annual growth.

The amnesty scheme, under consideration, may also include assets like gold and real estate besides cash.

In that case, the scheme will guarantee immunity from prosecution under the Income Tax Act, Wealth Tax Act and the Benami Transactions (Prohibition) Act. It will also ensure that declarations under the scheme are not subject to any scrutiny or inquiries.

Late finance minister Arun Jaitley, in his 2016 Budget, had announced IDS for domestic taxpayers. Those who declared their undisclosed income and paid 45% tax on that, faced no prosecution. The scheme had a small window of four months and attracted 64,275 declarations.