No new amnesty scheme for tax evaders, says Pranab

Government has no plans to bring a new amnesty scheme for tax evaders and wants to amend the Indo-Mauritius tax treaty to curb its abuse by companies, the Rajya Sabha was informed on Tuesday.

Government has no plans to bring a new amnesty scheme for tax evaders and wants to amend the Indo-Mauritius tax treaty to curb its abuse by companies, the Rajya Sabha was informed on Tuesday.

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"We are not enamoured by (suggestions for) another voluntary disclosure system (VDS)," Finance Minister Pranab
Mukherjee said during Question Hour.

VDS schemes in the past offered amnesty to people declaring black money and paying tax.

But VDS schemes cannot be hugely successful unless the rate of tax under the amnesty is lower than the prevailing
income tax rates, he said. This policy has been criticised as it amounted to penalising honest tax payers by asking them
to pay tax at higher rates.

Mukherjee said the Government was seeking amendment to the Indo-Mauritius tax treaty of 1980 wherein offshore firms
resident in Mauritius are exempt from tax on capital gains.

Mauritius wants to position itself as a financial hub and does not tax companies including Foreign Institutional
Investors registering with it for investing in overseas markets such as India. In 2000, OPED termed Mauritius as a
nation which offers "unfair tax competition."

"We want to amend the particular agreement with Mauritius," Mukherjee said adding New Delhi has offered to
compensate the island nation for any loss in revenues because of such change in the treaty to check companies evading paying taxes both in India and Mauritius.