Rs 65,250 cr black money declared: Relief to Modi govt; now it’s time for final crackdown
The credit should go to the political will shown by the government and tax men’s hard work
At the end of Narendra Modi government's black money declaration scheme, the tax department has reported Rs 65,250 crore worth black money from 64,275 declarations. This means about Rs 30,000 crore will flow into the government’s tax kitty based on 45 percent tax requirement. The figure is a clear relief to the Modi-government, which has been facing questions on its poll promises on the black money.
The credit should go to the political will shown by the government and tax men’s hard work. With the deadline over now, it is time for final crackdown on persistent tax evaders, which is necessary to send a signal to the honest taxpayer that the government will walk the talk on tough action on the guilty.
Going by the reports so far, most of the declaration has happened in the last minute rush, when the realization gripped black money holders that, post the deadline, things may not be easy going ahead, particularly so when the Goods and Services Tax (GST) regime kicks in next year.
The art of tax evasion will be much more difficult then. This is because at all stages, transactions will be recorded in the GST infrastructure. Considering this, it’s pretty clear that fear of being caught than the intent of complying with rules made the scheme successful. Also, the black money holders had a good reason to disclose their ill-gotten wealth since the government had offered relaxed payment terms for them than ever.
Consider this: Those who declared black money under the scheme can pay the 45 percent tax in three easy installments -- 25 percent by 30 November, another 25 percent by 31 March 2017 and the balance amount by 30 September 2017. The 45 percent penalty black money holders need to pay include tax, surcharge and penalty. If someone with unaccounted money hasn’t used such easy installment scheme, he is either a fool or someone who knows to fool the taxmen for the rest of his life. The four-month black money scheme was announced by Jaitley in the Union Budget 2016. The government never called it an amnesty, but in principle, it was nothing but an amnesty offered to the tax evaders.
At the press conference on Saturday, Jaitley said the money will go to the consolidated fund of India and will be used for public welfare. But, the FM refused to give any more specifics of the scheme’s findings, including the states which have contributed most and the size of the black money collected for individuals, citing the confidentiality promised in the scheme. It is also not clear how many of these declarants are total non-tax payers or the sectors they do business.
But, ultimately, the tax department should now have a good sense about all these details that’ll guide their future actions. This is the second such scheme for black money holders announced by the Indian government in the recent years. The first was in 1997, during the Congress-led government, when P Chidambaram was the finance minister (when the government collected close to Rs 10,000 crore).
Besides that, after Modi government came to power, it announced a 90 days amnesty-like window for foreign black money holders charging them 60 percent tax. A total of Rs 4,147 crore of undeclared wealth was declared and the government garnered Rs 2,500 crore from the whole exercise, a paltry sum considering the kind of black money stashed abroad.
This time, the window is open for both resident and non-resident black money holders. Hunting down black money has been one of the biggest election promises of Modi in 2014. Ever since he came to power, the NDA-government has indeed acted on multiple fronts to recover black money both from India and abroad. This includes renegotiating bilateral treaties and information sharing with tax havens.
While the government has indeed progressed on black money hunt to a larger extent, the bigger point here is that the government should now crack-down on the guilty with all might, besides making it clear that such schemes are not going to be a continuous exercise. Else, this can send a wrong signal to the honest taxpayers, something experts have warned in the past.
For instance, both the justice K N Wanchoo Committee in 1971 and the Shankar Acharya Committee in 1985 had pointed out the ill-effects of announcing black money voluntary declaration schemes unless there is a compelling reason to do so. “Resorting to such a measure during normal times and that too frequently, would only shake the confidence of the honest taxpayers in the capacity of the government to deal with the law breakers and would invite contempt for its enforcement machinery,” the Wanchoo panel had said in 1971.
Let this be the last such scheme for those with ill-gotten wealth. Now is the time to go for final crackdown.
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