The government today maintained it has not come out with any kind of Voluntary Disclosure of Income Scheme (VDIS) by proposing changes in the Income Tax Act, which experts believe are some sort of concessions to tap black money.
“There is no intention of government to give any sop in form of voluntary disclosure… we are tightening provisions, we are not relaxing provisions”, Finance Secretary R S Gujral said, when asked about media reports that government has sought to bring in a VDIS through back door.
Finance Minister Pranab Mukherjee, in his Budget speech, had proposed a series of measures to deter generation and use of unaccounted money, which included taxation of unexplained money, credits, investments and expenditures, at the highest rate of 30 per cent irrespective of the slab of income.
To check the menace of black money, the government on Friday proposed a slew of measures, including I-T return assessment up to 16 years with regard to assets held abroad and tax deduction at source (TDS) on transfer of immovable property and gold purchase.
The government plans tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold.
Mukherjee also said he proposed to introduce a General Anti Avoidance Rule (GAAR) in order to “counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel”.
The minister also said he proposed to lay on the table of the House a White Paper on black money in the current session of Parliament.
Besides, the Budget also proposes compulsory reporting requirement in case of assets held abroad and tax collection at source on trading in coal, lignite and iron ore.
Government also plans tax collection at source on cash purchase of bullion or jewellery in excess of Rs 2 lakh.
It has also been proposed to “increase the onus of proof on closely-held companies for funds received from shareholders as well as taxing share premium in excess of fair market value”.
Mukherjee proposed taxation of unexplained money, credits, investments, expenditures “at the highest rate of 30 per cent irrespective of the slab of income”.
The government also plans allowing Income Tax authorities to reopen assessment cases up to 16 years in relation to assets held abroad.
Mukherjee also proposed a system of Advance Pricing Agreement (APA) to significantly bring down tax litigation and provide tax certainty to foreign investors.
He said this was relevant in a globalised economy with expanding cross-border production chains and growing trade within entities of the same group.
“Though, the provision for APA has been included in the DTC Bill, 2010, I propose to bring forward its implementation by introducing it in the Finance Bill, 2012, he said.
Last year the government had embarked upon a five-pronged strategy to tackle the “malaise of generation and circulation of black money” and its illegitimate transfer outside India.
The Finance Minister said, “Government has taken a number of proactive steps to implement this strategy”.