Income Declaration Scheme (IDS) which lasted for 4 months has finally come to an end. Although the scheme was plagued by a slow beginning, it picked up in the end and drove more than 65,000 declarants to disclose approximately Rs. 75,000 crores of black money. The scheme began on June 1, 2016 and ended on September 30, 2016. Since the window to declare undisclosed income has come to an end, the question that remains is, “What happens to black money hoarders those who ignored it and what can government do with money collected from this scheme?”
Those of you who declared your assets under IDS, rest assured that your information with the government will stay confidential and there will be no enquiry regarding the same. However, if you failed to avail the benefits of this scheme then you are sitting in danger zone and may be penalized with high penalties and prosecution as per the provisions of Income Tax Act. For not disclosing your income correctly a penalty ranging 100% to 300% of the taxes due can be levied upon you in addition to the regular tax and interest payable. It can also land you in jail anywhere from 6 months up to 7 years. Government has repeatedly hinted at dire consequence for those failing to avail the benefit of IDS.
Income Declaration Scheme – 2016 has been way more successful than the one implemented under Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015. AVDS could attract only 638 declarants disclosing foreign assets of Rs. 4147 crores only. The success of IDS has brought a considerable amount of fund at disposal of the government. However, government is yet to plan the use of this newly found income. There are certain ways in which the government can possibly use this income.
With tension rising on the LOC, government might reconsider their deal with France over Rafale fighter planes. Using these funds, government can afford to buy 19 additional fighter jets. Another reasonable way to use this money could be to use it in funding MNREGA. Every year government spends considerable amount of resources in funding the same. This money can be used to fund MNREGA for 6 months. Recently we heard hues and cries over the removal of a few cities from the list of smart cities. These funds can support the development of 12 additional smart cities. These are few areas where we think this income can be used. Let us know where you think the government needs to invest these resources.