Amnesty scheme may resurface

MUMBAI: This Budget may propose yet another amnesty scheme. A debate is currently on among top government officials on the feasibility of introducing an amnesty scheme, probably in line with the Voluntary Disclosure Scheme (VDIS) ’97, which generated over Rs 10,500 crore of undisclosed income.
Though the concept is yet to be crystallised, the amnesty scheme being debated is likely to be coupled with introduction of tougher penalties for concealment of income.
If the government chooses to introduce another amnesty scheme, it will be different from VDIS-’97 in some ways, as the government had given an undertaking to the Supreme Court in 1997 that it would not bring in another such scheme. Officials are also debating the applicability of the amnesty to money stashed abroad.
While the government plans, as suggested by Kelkar committee, to bring in severe penalties for concealment of income, about 100% to 300%, against the 60% payable currently, it is likely to adopt a carrot- and-stick policy by providing a chance to the assessee to disclose once and for all concealed income.
Also, the duration of amnesty period is also a matter of debate. The period could be for a longer duration, unlike VDIS, which lasted for nine months only.
There were reports last year of plans by the government of introducing another amnesty, but the idea was dropped at the last minute, apprehending criticism and legal tangles. All amnesty schemes are efforts to bring in unaccounted income into the mainstream economy. However, experts say that money generated through such schemes account for only a small fraction of the actual size of the black economy.
Some experts point out that most such schemes have been grossly misused by unscrupulous elements who use the loopholes in such schemes to convert unaccounted income, by paying minimal tax.
Any amnesty scheme generates controversies and litigation because such schemes are considered by many a form of injustice against honest tax payers who complied even when the tax rates were prohibitively high , 60%-65% and more, while allowed the dishonest ones to get away with a minimal cost.