Income Disclosure Scheme Response has improved
The government has noticed an improvement in response to the Income Disclosure Scheme (IDS) 2016 in the last few weeks even as top sources sought to play down concerns of the tax department launching an offensive against businesses and individuals who won’t declare unaccounted wealth by Friday.
In recent weeks there have been fears among taxpayers that the tax department will launch a series of raids to ensure that those who do not come clean by paying the 45% tax and penalty under IDS do not go away unpunished. The scheme is about to close on Friday.
On Wednesday, the tax department told it will accept declarations without PAN but ensure that the unique number would be obtained later under the black money compliance window.
Various Soureces of Finance ministry explained that there was bound to be an increase in compliance given that several taxpayers did not disclose their income or under-reported it.
They pointed out that about 40% of those who filed returns did not pay taxes and some of them distributed the income among family members. A bulk of the individual taxpayers were from the salaried class, while a large chunk of professionals and businessmen seen to be among those under-reporting their income and evading taxes.
sources also point out that about 75% of the taxes were paid by 48 companies in the country , with nearly 30 of them being public sector banks and companies.
Increasing the tax base is seen as a key element of the government’s strategy to reduce the tax burden.
The IDS 2016 is seen as a step in that direction and the government has relaxed several of the provisions in order to improve the response after a similar exercise last year for those with undisclosed income or assets hold overseas did not yield a high response.
It indicate that the response has picked up in recent weeks with close to 500 applications being filed in a day. While tax consultants have pointed out that the 45% tax and penalty under the schemes was holding back disclosures, the government was clear that it did not want to be unfair to honest taxpayers.
One of The source said that The tax under VDIS 1997 was about 8% to 10%. At that time rate, the government could have moved up Rs 2 lakh crore this time,“