The Hindu Business Line : Scheme to unearth black money without any change in law likely

EVEN while admitting that there is actually no real deterrent to generation of black money in the economy at the moment, given the lack of administrative muscle required to root out the menace, the UPA Government, it is learnt, may not be averse to a well-disguised amnesty scheme to unearth such unaccounted wealth, said to hover in the region of Rs 70,000 crore.

It is in the air, and even tax practitioners are anticipating it in the forthcoming Union Budget. Sources close to the Finance Ministry feel it may be somewhat like the "Declaration of Higher Income and Wealth Scheme of 1985", under which assessees were allowed to file returns for earlier years (revised or fresh), and the same are accepted as it is without attracting any penalty.

In the 1985 scheme, the returns were regularised by issue of formal notices under section 148 of Income-tax Act/section 17 of Wealth Tax Act. It is, however, quite clear that the immunity granted against prosecution cannot be availed of by assessees whose premises have been searched by the tax authorities.

Asked how liberal will the ITO be in the case of jewellery or other assets, if the source of acquisition cannot be satisfactorily explained, direct tax experts said the taxpayer should not expect that he can evade income tax and pay only wealth tax. Honesty must be whole-hearted and not partial, it is pointed out.

According to Mr N.P. Jain, noted tax lawyer, the Government should make tax evasion far more costlier than honest payment of tax.

Sources feel the scheme may be notified through a CBDT circular, as done in 1985, and not by change of law. It is, however, strongly felt that the Finance Minister may declare his intention to evolve such a scheme in Budget 2005-06 on February 28.

Senior Finance Ministry officials concede that the Government, equipped with a comprehensive data base through the Tax Information Network (TIN), may soon be in a much better position to nail the habitual tax-evaders, and, therefore, an amnesty scheme at this stage may actually succeed in flushing out large amounts of black money without any administrative saber-rattling. Tax-dodgers would be better off paying their tax dues at a flat rate under an immunity cover rather than face the music through search and seizure later, it is pointed out.

It may be recalled that the VDIS 1997, in force from July 1, 1997 to December 31, 1997, wherein assessees declaring undisclosed wealth were made to pay a flat rate of 30 per cent of tax, fetched a handsome amount of Rs 10,050 crore. Immunity from prosecution, and/or penalty, however, will not be allowed for offenders under Indian Penal Code, Narcotics and Psychotrophic Substances Act or Prevention of Corruption Act.

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Scheme to unearth black money without any change in law likely