Declaration of undisclosed Black Money – an analysis to understand success

[CA DEV KUMAR KOTHARI]

As per  written reply to a question in Rajya Sabha found on link (https://www.taxmanagementindia.com/wnew/print_tmi_Commentary.asp?ID=16914 ), given by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance the following information about IDS is analysed:

1. total number of 64,275* declarants have been made under IDS
2. undisclosed income of ₹ 65,250* crore  has been made under the Income Declaration Scheme, 2016. (*Provisional).
3. These figures are marked (*Provisional) that means some changes may take place and final figures may be different.
4. Therefore, apparently, average per declaration is just a bit more than Rs. one crore.

Rs. one crore is too small sum if we consider disproportionate assets found with government officers / employees and politicians in unearthed cases which are very few and most of them are not brought in public gaze. 

IDS success rate:

An average declaration of ₹ 101 lakh is very small to call it highly successful.

Particularly if we consider  some of cases of cash and other properties found in cases of disproportionate income of government officers and even junior officers in government and government organizations, we can say that an average declaration of ₹ 101 lakh is very small.

However, because government officers could not make declarations under IDS, therefore, it is difficult to say whether IDS was successful.

The IDS could have been more successful, if it was made a ‘SCHEME TO CLEAN ALL SINS’ by all including corrupt government officers and politicians.

For the reason that government officers  and politicians, could not make declaration under IDS, the effort for bringing out black money was half hearted.

Voluntary or not:

The grapevine and ground reality is that declarations under IDS were not voluntary of tax payers and many were forced by tax authorities by adopting practices of direct or indirect threats, pressures and showing fear of proceedings and also by undertaking surveys etc.

The payment is to be made in instalments, it is likely that some declarants may withdraw declarations on some possible grounds like it was made due to pressures from tax authorities directly and indirectly through A/R etc.

Under the Income Declaration Scheme, 2016 the amount of tax, surcharge and penalty is payable in three instalments. Final collection is to face contingency.

This has also been stated that the notified date for payment of first instalment is 30^th November, 2016. Hence, the quantum of tax collected as part of the Scheme cannot be quantified at this stage.

View of author:

As per author, on consideration of time spent by tax officers in perusing IDS (including pressure tactics), massive advertisements and publicity, indirect pressure exerted through news channels by way of news, views and advertisement which were in nature of threatening and pressuring tactics, etc. it cannot be said that IDS is successful.

This is because the target was wrong. Target must be people who had earned illicit money by misuse of powers (including wrong use of powers to threat and harass public) and in a way extorting hard earned money of public. Therefore, a scheme to clean all sins should be introduced with immunity from any action on corrupt officers declaring their ill-gotten income

It is doubtful that black money with corrupt officers and politicians will vanish due to demonetization of currency note for the reasons that a corrupt officer or politician  do not require cash so he convert his black money in cash into  kind or properties (gold , diamonds, and landed properties) or spent for enjoyment. Therefore, the black and ill-gotten money in form of currency notes of ₹ 500/- and ₹ 1000/- will not be much with them. Even if they have such notes, they will get it converted by many means including threats and harassment of public.

Declaration of undisclosed Black Money