As the clock ticks down to midnight on September 30, queries about the Income Declaration Scheme (2016) are flooding in with senior income-tax officials expecting a frantic spurt in black money disclosures before time runs out.
The government expects a good response to the scheme that opened on June 1 based on declarations made so far, feedback from tax advisers and inquiries pouring in. And the kind of questions that people are asking? “I received funds through hawala, can I regularise my income now? I sold my house for part cash and part cheque, what should I do?”
Much of the surge in questions has expectedly come from business centres such as Mumbai, Pune, Surat and Ahmedabad, but also, intriguingly, parts of western Uttar Pradesh, officials said.
As with the earlier scheme for declaration of overseas assets, officials expect major declarations in the last few hours, making estimates difficult. An early internal assessment pegs tax collections at more than Rs 25,000 crore.
The income-tax department has intensified its “convert black to white” campaign in the past few weeks, calling on those with undeclared income to come clean or face the music after September 30 while simultaneously holding out the assurance that declarations will be kept secret.
“Response has picked up over the past 10 days,” an official told ET. “It was expected that the filing would be more in the last 10 days, so this is on predictable lines.”
The government had announced a scheme to unearth domestic black money in the February budget.
The four-month window — June 1 to September 30 — gives those with undisclosed income or assets achance to legitimise these by paying tax, penalty and surcharge totalling 45% of fair market value. It also offers an option for staggered payments that can be made in installments through to September 2017. Tax advisers said interest in the scheme had grown in the past 10 days.
The response would have been better if the terms had been more liberal, particularly for valuation of assets on which tax has to be paid on a notional basis, said Chander Sawhney, partner and head, valuation and deals, Corporate Professionals Capital Pvt. “But the message from the income-tax department is very clear and people do not want to take chances.” The late burst will mean collections rising significantly.
“I think the rise in the past few days is partially due to the fact that people wanted to wait till the last to declare and are increasingly realising the consequences of not declaring,” said Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP. “People have also got comfort that a lot of their concerns have been addressed by the Central Board of Direct Taxes by issuing FAQs.”