The direct tax revenues collections have risen by only 3% so far for the ongoing fiscal year. The collections are likely to be well below the target of Rs 13.35 lakh crore for the FY 2019-20. The government is planning to announce a “voluntary disclosure of income scheme” for tax evaders for encouraging reporting of undisclosed income to tax authorities.
The income disclosure scheme would be in line with the income disclosure scheme announced earlier in 2016. The scheme would be with a one-time payment of tax and penalty, and without the risk of prosecution.
Earlier, in 2016, the government had announced an Income Disclosure Scheme under which taxpayers had declared hidden assets worth Rs 65,000 crore. The government expects to garner Rs 50,000 crore from another round of tax collection through another amnesty scheme. The tax rate could be 45% on the income and assets declared. The scheme could target tax evaded since 2014, the beginning of the first term of the Modi government.
According to government officials, a large number of taxpayers have not declared their correct income and assets in the past fearing penal consequences. The scheme can provide these income tax defaulters with an opportunity to be tax compliant by declaring income and assets and paying taxes on the same. The tax collections would boost the overall tax collections for FY 2019-20.
The amnesty scheme will grant immunity from prosecution under the Income Tax Act, 1961 and Benami Transactions (Prohibition) Act. The scheme is also expected to immune taxpayers from further inquiries or scrutiny from the income tax department.
Under the earlier amnesty scheme announced by the late Finance Minister Mr Arun Jaitley, about 64,275 taxpayers who made declarations by paying 45% tax, were not scrutinised by the department.
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I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.