The Government may offer an “Offshore Voluntary Compliance Scheme” for undisclosed bank accounts and assets held abroad.
“With so many ways to get information, this is the right time to think about such a scheme,” said a senior Finance Ministry official. He, however, clarified that the tax authorities may not insist on the money being brought back into the country or invested in specific areas.
However, “the Government may consider levying a penalty at the minimum rate of 100 per cent,” the official said.
The penalty rate on tax dues ranges from 100-300 per cent
The broad contours of the scheme will be similar to the various Voluntary Disclosure Information Schemes (VDIS) offered for undisclosed incomes/assets held in India. But the authorities may not ask for disclosure of the money's source.
NO immunity from prosecution
Also, payment of tax and penalty would not give any immunity from criminal prosecution, the official clarified.
An expert group, headed by the Central Board of Direct Tax (CBDT), had suggested an amnesty scheme for undisclosed accounts and assets held by resident Indians abroad. But since information about such accounts was not readily available, it was felt that such a scheme would not be feasible.
Suggestions for such a scheme were also made during the meeting between the Finance Minister and top industrialists on August 1.
According to the official, once the tax authorities get information from the Organisation for Economic Co-operation and Development, the Income Tax Overseas Unit, the Tax Information Exchange Agreement and media reports, it will approach the person concerned, who can refuse to accept the fact, but only if he/she has evidence.
If the information is proved correct, a tax demand will be raised.
And, if the person concerned refuses to pay, he/she can be prosecuted.
The Government has signed a tax information exchange agreement with five nations, including Cayman Islands and the Bahamas.
Of these, four are in place and 17 more are expected to be signed.
So far, nine VDISs have been floated, starting in 1951; the last one was in 1997. The last scheme is estimated to have collected Rs 10,100 crore as tax.