The PM’s ‘golden last chance’ for those holding undisclosed domestic income and/or assets may become a lost chance for the Government, going by the contours of the Income Declaration Scheme 2016. It calls for a stiff tax rate of 45 per cent including penalty. That this is calculated on the fair market value (as on June 1, 2016) of the assets disclosed makes it a taller order. For this purpose, the valuation of various assets such as immovable property, jewellery, shares, agricultural land and so on have to be done by different registered valuers (the list of which has been put up in the tax department’s website) and valuation reports need to be obtained. Besides, the fact that there are several grey areas in the operation of the scheme and that the Government has been prompted to issue one set of FAQs after another to clarify the doubts doesn’t help; nor does the tight deadline of November 30, 2016 for payment of tax and penalty due.

Agreed, it is not an amnesty scheme and those who hide their incomes cannot have it easy. But if unofficial reports that the scheme intends to collect ₹50,000 crore in revenue is anything to go by, a more realistic view is necessary. Ultimately, though the window rightly grants immunity from scrutiny, enquiry or prosecution under certain laws, shouldn’t one be able cough up so much cash in a short time-frame? Selling the asset to pay up may take time; how many would come forward to buy one with a shady past?

The limited success of last year’s window which dealt with undisclosed foreign income needs to be kept in mind. With a total of 60 per cent tax on undisclosed income, this window saw assets worth only ₹4,147 crore being declared and about ₹2,400 crore of tax collected from 600-odd disclosures. A more practical rather than an over-ambitious approach would help serve both the intention of fetching meaningful revenues for the Government, and cleaning up the system.

Parvatha Vardhini C Chief Research Analyst

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