Black money collection: Every Indian will get Rs 18 instead
Black money collection: Every Indian will get Rs 18 instead of Rs 15 lakh
New Delhi: The payout is just over Rs 18 per Indian - a far cry from the Rs 15 lakh that was seared into the collective psyche during the heat and dust of last year's general election.
Reality kicked in on Thursday when the Centre announced that only 638 taxpayers had declared undisclosed foreign assets worth Rs 3,770 crore -demolishing the tall claims of the government on bringing back all the black money supposedly stashed abroad.
The finance ministry said in a statement that the figures were subject to final reconciliation. The compliance window for making the declarations had been open for three months between July 1 and midnight of September 30.
The taxpayers who have disclosed foreign assets will have to pay a 30 per cent tax and a 30 per cent penalty on the declared amount. The government is likely to receive Rs 2,262 crore by December 31.
The Congress was quick to attack the Narendra Modi government for the hollowness of its promise of depositing Rs 15 lakh in each and every citizen's account within 100 days of coming to power.
What exactly Modi had said on the campaign trail is a matter of dispute. The tapes of one speech in November 2013 show Modi saying "every poor Indian", not every Indian. On another occasion, he said a part of the amount would be gifted to the salaried who paid tax. Modi's principal campaign promise of " achchhe din" ahead had become an overarching umbrella under which every wish found a shelter.
BJP president Amit Shah had once tried to clear the air by describing the black-money pitch as a " jumla (manner of speaking)" and a "kahawat (metaphor)" but ended up reaffirming the perception that Modi had made the Rs 15-lakh promise to every Indian.
In the absence of any clarification from the Prime Minister, the Rs 15-lakh figure has become a metaphor for what opponents view as the hyperbole associated with Modi and it has hung around his government's neck like a millstone.
Critics also seized on Modi's Independence Day speech in which he had said that several people had made black money disclosures worth Rs 6,500 crore and the entire amount would accrue to the exchequer. They said Modi had clearly overstated the figure.
In Patna, finance minister Arun Jaitley quickly cleared the confusion over the conflicting figures by suggesting that the sum mentioned in Modi's speech pertained to the list of HSBC accounts that the government had received from official channels in France and Germany.
"This figure of Rs 3,770 crore is over and above the figure mentioned by the Prime Minister," Jaitley said.
Finance ministry officials rushed to defend the lowball collections from the disclosure scheme which isn't characterised as an amnesty scheme even though it has some features of similar programmes in the past.
Revenue secretary Hasmukh Adhia told reporters in Delhi that the government had not set any targets for the voluntary disclosure of black money. "It was an opportunity we gave to the people. We will now start taking action against those who have not declared their concealed income."
Taxpayers with undisclosed foreign assets who get caught now will face the prospect of a tax penalty of 120 per cent of the undeclared wealth and could also run the risk of a 10-year jail sentence.
The expected tax collection of Rs 2,262 crore under the black money scheme pales in comparison to the Rs 10,050 crore that former finance minister P. Chidambaram's Voluntary Disclosure of Income Scheme (VDIS) netted in 1997. The scheme had offered a flat tax penalty of 30 per cent on all previously undisclosed income. Black money schemes have rarely been as successful as the VDIS of 1997.
In 1991, then finance minister Manmohan Singh had devised a disclosure scheme that required errant taxpayers to invest the money in bonds floated by the National Housing Bank. Under the scheme, 40 per cent of the deposited amount would be deducted and used to fund low cost housing and slum clearance projects. Taxpayers could retain the remaining 60 per cent of the deposits. The scheme yielded just Rs 60 crore.
A black money scheme in 1975 raised Rs 241 crore and another in 1965 rustled up just Rs 29 crore.
India has no official estimates of black money.
According to a 2013 report by Global Financial Integrity, a Washington-based group that researched cross-border money transfers, India ranked third in the world for illegal money transfers overseas, behind China and Russia.
High-net-worth individuals and private companies are believed to have moved nearly $440 billion between 2002 and 2012.
Arun Kumar of Jawaharlal Nehru University, author of The Black Economy in India, has estimated the stash of black money abroad at a staggering $2 trillion.
Girish Vanvari, national head of tax at KPMG India, said: "Seeing the quantum of declarations made, one can question whether the black money law has been successful. A much higher figure had been expected. The low response can be attributed to uncertainty of the process and lack of clarity."
Some said that taxpayers seemed to have a trust deficit with the Modi government. They were not completely convinced that the government would not use the disclosures to harass them later.
The Central Board for Direct Taxes had tried to allay fears by issuing a clarification two days before the deadline. It said that all those declaring wealth held abroad would be immune from prosecution under the Foreign Exchange Management Act (FEMA) and four other laws - the Income-Tax Act, Wealth Tax Act, Companies Act, and Customs Act.
Sudatto Sen FCA, an independent Delhi-based tax expert, said: "The 60 per cent tax rate on the disclosure scheme was perhaps a dampener, which is why there were no big disclosures."
Income-tax officials said that most of those who had declared their foreign assets were medium-sized industries and businessmen. None of the large companies or tycoons had made any disclosures.