The government will earn an estimated Rs 30,000 crore after thousands of Indians revealed previously undeclared money under a one-time opportunity to clean up their accounts, finance minister Arun Jaitley said on Saturday.
Jaitley said Rs 65,250 crore worth “black money” was disclosed in the form of cash and other assets during a four-month window -- Income Disclosure Scheme (IDS) -- that ended Friday. He said 64,275 declarations were made with an average of Rs 1 crore each filing.
“With so many people declaring money, it shows (that a) significant number of people want to become tax compliant…it’s a very good figure and if you take as part of all the steps that the government has taken cumulatively, these are very significant amounts,” Jaitley said at a press conference.
The additional revenue will be used for welfare schemes, Jaitley said.
Black money arises mainly from incomes not disclosed to the government, usually to avoid taxation and sometimes because of its criminal links.
Acting on a pre-poll promise, the Narendra Modi-led government has initiated several steps to repatriate crores of rupees in slush funds or black money stashed in safe havens abroad.
However, the government has been facing opposition pressure to act since the release of financial documents in April naming companies and individuals who allegedly dodged taxes by setting up shell companies and accounts through brokers based in Panama. The so-called ‘Panama Papers’ include the names of about 500 Indians who have allegedly invested in offshore companies.
“In Panama cases, 250 references have been given to other countries and investigation is progressing in good pace. People who figured in the HSBC list, about Rs 8,000 crore assessment have been completed…164 prosecutions have been filed,” Jaitley said.
He said the declarants have the flexibility of paying their taxes -- including 7.5% penalty and 7.5% surcharge -- in installments up to September 2017. However, 50% of the amount must be paid by March.
The additional revenue will help the government meet its fiscal deficit target of 3.5% for the current financial year, Jaitley said.
In 2015-16, the government’s total tax collection – direct and indirect -- stood at Rs 14.60 lakh crore.
Refusing to compare IDS with the voluntary disclosure scheme of 1997, Jaitley said the earlier scheme fetched Rs 9,760 crore in taxes.
Modi complimented the tax department and those who availed the scheme.
“I compliment all those who chose to be tax compliant in IDS-2016. This is a great contribution towards transparency and growth of the economy,” he tweeted.
The IDS was aimed at providing all domestic tax payers with undisclosed income or assets to come clean and avoid prosecution under the Income-Tax Act, Wealth Tax Act and Benami Transactions (Prohibition) Act.
“This is an impressive figure and could only go up further…more importantly, the compliance fear has crept in,” said Girish Vanvari, KPMG’s national head of tax.