VDIS
Encyclopedia
Voluntary Disclosure of Income
Scheme (VDIS) was a very unconventional but successful step among the Indian economic policies. It would give an opportunity to the income tax
defaulters to disclose their undisclosed income at the prevailing tax rates. This scheme would also ensure that the laws relating to economic offences will not be applicable for those defaulters. Over 3,50,000 people had disclosed their income and assets under this scheme, which bought revenue of INR 7800 crore
to Indian finance ministry. The scheme were closed on 31 December, 1998.
Being a part of Government of India
, The Central Board of Direct Taxes launched this scheme on June 18, 1997. It continued till 31 December, 1998. These were the salient features of this scheme:
1. The person making a disclosure would have to file a declaration in a prescribed form before the Commissioner of I-T. The Commissioner shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income and the amount of I-T paid in respect of the same. A person may make a declaration in respect of any income chargeable to tax for any assessment year prior to the assessment year 1998-99:
2. The scheme would cover all persons, corporate or non-corporate. The tax payable on the disclosed income will be 30% in the case of individuals and 35% in the case of other declarants, viz, corporates and firms. The tax on the voluntarily disclosed income or wealth would have to be paid before making the declaration, and proof of such payment must be attached along with the declaration.
3. This declaration can't be used as evidence against the declarant under any of the following Acts:
4. Those opting for the VDIS would be granted immunity from prosecution under the Foreign Exchange Regulation Act, 1973, the Income Tax Act, 1961, the Wealth Tax Act, 1957, and the Companies Act, 1956.
5. A person in whose case a search under section 132 of the I-T Act has been initiated or where books of account, other documents or other assets have been requisitioned under section 132A will not be entitled to make a declaration in respect of the previous year in which the search was made or any earlier previous year.
individuals, with a sprinkling of companies and firms, disclosed their undisclosed incomes. Sequestered assets worth was over INR 26,000 crore. With tax levied at 30 per cent of the disclosed asset, the inflow of around INR 7,800 crore to the treasury is a good one-fifth of what the Government had collected in direct taxes in the past financial year. Watching the success, then Union Finance Minister, P. Chidambaram
commented, "It is my faith that, given a chance, the people of India come clean". He claimed that his team of Income Tax officials had got INR 33,000 crores to turn white.
, 1973, the Income Tax Act, 1961, the Wealth Tax Act, 1957, and the Companies Act, 1956 in exchange for self-valuation and disclosure of income and assets. The Comptroller and Auditor General of India
condemned the scheme in his report as abusive and a fraud on the genuine taxpayers of the country.
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
Scheme (VDIS) was a very unconventional but successful step among the Indian economic policies. It would give an opportunity to the income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
defaulters to disclose their undisclosed income at the prevailing tax rates. This scheme would also ensure that the laws relating to economic offences will not be applicable for those defaulters. Over 3,50,000 people had disclosed their income and assets under this scheme, which bought revenue of INR 7800 crore
Crore
A crore is a unit in the Indian number system equal to ten million , or 100 lakhs. It is widely used in India, Bangladesh, Nepal, and Pakistan....
to Indian finance ministry. The scheme were closed on 31 December, 1998.
Features of the Scheme
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
, The Central Board of Direct Taxes launched this scheme on June 18, 1997. It continued till 31 December, 1998. These were the salient features of this scheme:
1. The person making a disclosure would have to file a declaration in a prescribed form before the Commissioner of I-T. The Commissioner shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income and the amount of I-T paid in respect of the same. A person may make a declaration in respect of any income chargeable to tax for any assessment year prior to the assessment year 1998-99:
- for which he has failed to furnish a return under section 139 of the I-T Act.
- for which he has failed to disclose in a return of income furnished by him under the I-T Act before the date of commencement of the Act.
- which has escaped assessment in terms of section 147 as it stood prior to 1.4.1989 and thereafter.
2. The scheme would cover all persons, corporate or non-corporate. The tax payable on the disclosed income will be 30% in the case of individuals and 35% in the case of other declarants, viz, corporates and firms. The tax on the voluntarily disclosed income or wealth would have to be paid before making the declaration, and proof of such payment must be attached along with the declaration.
3. This declaration can't be used as evidence against the declarant under any of the following Acts:
- I-T Act, 1961
- Wealth-tax Act, 1957
- Foreign Exchange Regulation ActForeign Exchange Regulation ActThe Foreign Exchange Regulation Act was legislation passed by the Indian Parliament in 1973 by the government of Indira Gandhi and came into force with effect from January 1, 1974...
(FERA), 1973 - Companies Act, 1966
4. Those opting for the VDIS would be granted immunity from prosecution under the Foreign Exchange Regulation Act, 1973, the Income Tax Act, 1961, the Wealth Tax Act, 1957, and the Companies Act, 1956.
5. A person in whose case a search under section 132 of the I-T Act has been initiated or where books of account, other documents or other assets have been requisitioned under section 132A will not be entitled to make a declaration in respect of the previous year in which the search was made or any earlier previous year.
Success of the scheme
VDIS succeeded more than the India finance ministry expected. Over 3.5 lakhLakh
A lakh is a unit in the Indian numbering system equal to one hundred thousand . It is widely used both in official and other contexts in Pakistan, Bangladesh, India, Maldives, Nepal, Sri Lanka, Myanmar and is often used in Indian English.-Usage:...
individuals, with a sprinkling of companies and firms, disclosed their undisclosed incomes. Sequestered assets worth was over INR 26,000 crore. With tax levied at 30 per cent of the disclosed asset, the inflow of around INR 7,800 crore to the treasury is a good one-fifth of what the Government had collected in direct taxes in the past financial year. Watching the success, then Union Finance Minister, P. Chidambaram
P. Chidambaram
P. Chidambaram or Chidambaram Palaniappan, sometimes written Palaniappan Chidambaram is an Indian politician with the Indian National Congress and present Union Minister of Home Affairs of the Republic of India. Previously he was the Finance Minister of India from May 2004 to November 2008...
commented, "It is my faith that, given a chance, the people of India come clean". He claimed that his team of Income Tax officials had got INR 33,000 crores to turn white.
Controversies
VDIS granted income-tax defaulters indefinite immunity from prosecution under the Foreign Exchange Regulation ActForeign Exchange Regulation Act
The Foreign Exchange Regulation Act was legislation passed by the Indian Parliament in 1973 by the government of Indira Gandhi and came into force with effect from January 1, 1974...
, 1973, the Income Tax Act, 1961, the Wealth Tax Act, 1957, and the Companies Act, 1956 in exchange for self-valuation and disclosure of income and assets. The Comptroller and Auditor General of India
Comptroller and Auditor General of India
The Comptroller and Auditor General of India is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is...
condemned the scheme in his report as abusive and a fraud on the genuine taxpayers of the country.