The ongoing Income Declaration Scheme (IDS) 2016 has perhaps not garnered as much money as was envisaged by the government. I say so, because a few taxpaying friends I know of received a notice from income tax officers reminding them of the last date for the closure of the amnesty scheme for declaring black money or undeclared income. We are all used to receiving communication from service providers like mobile operators, electricity suppliers or gas suppliers, who frequently send reminders on due bills with a one-liner – ignore if already paid. This one was very different as it had no such mention. In fact, these notices had a brief summary of the past few years’ IT returns, which was well audited and paid for.
Yet, the notice had a tenor which spelt out loud and clear – we do not trust you and that if you do not avail of the window of opportunity to declare the undisclosed income (Black Money), you will be liable to further action. For long I thought this scheme was meant for dishonest taxpayers or non taxpayers to come clean. If you look back, since 1951 till 1997, there have been 10 such amnesty schemes open to the public. Yes, several people crib that such schemes allowed dishonest people to declare undisclosed income and pay penalties at a much lower rate than they should have.
Only two of these schemes were seen as successful: the income declared under amnesty circular 1985/86 was Rs 10,778 crore, and under VDIS, 1997, Rs 33,000 crore. So far, the sums being reported under the IDS 2016 are pale in comparison to the 1997 scheme. One of the reasons being, there is very less avenue left for one to hoard black money over the past decade, even if the government estimates more black money being in the system.
A lot of the black money could be with rich farmers who do not fall under the ambit of income tax, as agricultural income is exempt from being treated as income for tax purposes. My concern is the harassment that several honest taxpayers may face due to this communication, which I hear has reached to several lakh taxpayers. The belief that every taxpayer is dishonest goes against the grain of income tax department. The hardly impressive number of taxpayers is a matter of shame. According to data released by the tax department recently, a total of 2.87 crore individuals filed income tax returns for 2012-13, but 1.62 crore of them did not pay any tax.
There are about 35 million taxpayers, which cuts a rather unsavoury picture of the government and tax department’s efforts to increase the tax base. IDS schemes are welcome, but it should be done in a manner that brings in more taxpayers into the system than chasing the existing base to cough up more or coerce them into declaring what they may not have to declare additionally to what they have.