Conversation between Krishna & Arjun
Arjun: Who can participate in Income Declaration Scheme 2016 (IDS) introduced under Finance Act, 2016 by the Indian Government?
Krishna: Following is a list of people,
Arjun: What if the IT department will harass me once I participate in this scheme?
Krishna: This is just the negativity created by the masses or general public. You only think once you pay 45% tax then why would Government will harass you? Instead they will catch those who are trying to escape/hide.
Arjun: Am I not calling or inviting disasters by participating in the scheme myself? Isn’t it like “Aa bail mujhe maar!!”
Krishna: Even during the past, Government had granted relief under Voluntary Disclosure of Income, 1996 and the promise given was honored by them. Even in this scheme they had given relief for scrutiny/survey/raid and prosecution and like last time they will stick to their words.
Arjun: Why should I pay such a higher rate of 45% (tax & penalty)?
Krishna: If you compare the normal situation in case of search, scrutiny etc. with IDS 2016 you will automatically understand the benefit. Have a look at this.
Arjun: The amount of tax paid by me is wasted or gets accumulated in the pockets of the politicians or bureaucrats then why should I pay?
Krishna: Government utilizes your money to provide civil amenities and help the poor for example Government hospitals give best treatment at nominal rates. For example KEM / JJ / GT in Mumbai. Be it facilities in the hospital or construction of roads, clam, PDS, free education, relief to flood victim. All such facilities may be available using the Tax paid by us.
Arjun: There may be many people who will disclose income and it will not affect whether I disclose or not! So why should I participate in the scheme? Our Country will not incur any loss if I do not disclose.
Krishna: You must have heard the story of Akbar & Birbal where Akbar tells every citizen to drop one glass of milk in the well. Then each and every citizen thought that their single participation will not affect the quantum of milk in the well and lastly next morning Akbar founds the well empty. Thus we learn that we should never doubt our single participation in any cause.
Arjun: Who will come to know if I don’t pay tax?
Krishna: You can hide it from others but god & your own conscience will always know the truth.
Arjun: Will my settled assessments/cases can be reopened?
Krishna: One does not have to pay wealth tax on declared income/assets. The government has clarified the same. Even government has given guarantee that none of the cases which are completed will not be affected even prosecution is exempted by the government
Arjun: Till now there has never been any search or survey on me, then how will the Income Tax Department come to know about my undisclosed income?
Krishna: Income Tax Department has been adopting latest Information Technology and thus now the department has access to various information which was previously not accessible by them. There goes a saying in gujarati that “najanyu janaki naathe kale savare shu thavanu che ?” i.e. even the god is not aware of what will happen in future.
Arjun: What benefit will I receive for myself and my family by way of participating in this scheme?
Krishna: As previously said you will get mental peace and satisfaction by participating in the scheme and thus you can focus on your business and personal life. Consequences of investment out of black money are very harsh and most of the people are aware of the same. Once you have declared the undisclosed income you can invest the same in viable safe options which will be beneficial to you and your family.
Arjun: What can I disclose under this scheme?
Krishna: Unaccounted, undisclosed income, shares whether quoted or unquoted, loans and advances, gold, silver, diamond, jewellery or furniture made up of precious metals, flats, house, shops, godowns, farmhouse, cars etc. Be it hidden fixed deposits or bonds, insurance policies, post deposits. It also includes cash and bank balances. All of the above can be disclosed under scheme. The person disclosing the income has to pay 45% tax on the FMV on 01/06/2016 or the cost whichever is higher. By paying just 45% one can purchase 100% mental peace.
Arjun: 45% tax sounds too higher or unreasonable, kindly show some path.
Krishna: You might find 45% higher but by Declaring Rs 100/-you can save Rs 55/-.If you compare the people who have paid tax honestly then adding up the savings you made by Tax Evasion and its value creation (i.e. Interest, Rent, Dividend, Profits etc) will be much higher than 45%. Therefore 45% tax is Reasonable.
Arjun: Can you Just Explain the religious views of the scheme?
Krishna: The Story of Vaaliya thief/lutaro and Valmiki saint is very much popular. Even it is said in Bhagwatgeeta that one has to pay for the sins of his Life Himself. None of His relatives or Friends will share or take part in that.
Arjun: All the government comes up with similar schemes and hence I will participate next time when it comes?
Krishna: IDS 2016 has come after 20 years no one can tell when will it come next. There’s a popular quote in Gujarati “Jagya Tyaarthi Savar” which means start acting as and when you realize and hence you should take part as you have got the choice. And if you don’t participate then you will regret once the period for participation is over that others have the benefit and you missed the opppurtunity.
Arjun: What benefit will people get from this scheme?
Krishna: The way Vinoba Bhave had convinced the rich farmers to donate certain part of their lands to poor farmers so that they can earn on their own without depending on any other. Same way by participating in this scheme we can reduce inequality of income & wealth & for prosperous the society.
Arjun: You taught me so many things now I think I should take part in the scheme. Kindly tell me in detail why to take part in the scheme.
To make this scheme successful is the responsibility of every tax evader & officials of the government department, and professionals of our country. The only need is to gain the trust of the declarants.
Written by: CA Hiren Sanghvi (In Gujarati)
Translated by: Umed Ahir( In English)