A VDIS on the anvil?

New Delhi, Sep 14 (PTI) A special voluntary disclosure scheme for
bringing back blackmoney stashed away in tax havens abroad may be in
the offing. The CBDT is understood to be seriously considering
recommending to the government a scheme on the lines of the Voluntary
Disclosure of Income Scheme (VDIS) announced in 1996 to tap funds
lying abroad for productive use in India. Sources said the issue
gained momentum recently when captains of industry and business met
Finance Minister Pranab Mukherjee and impressed on him the need for
encouraging disclosure of unaccounted money kept in tax havens which
could be used to fund infrastructure projects in the country. A
proposal for ushering in a similar scheme was proposed earlier by an
expert group on blackmoney to the government. The thinking in the
government comes in the midst of a raging debate over unearthing
blackmoney and illegal funds parked abroad. The Ministry is
considering the formulation of a such a scheme in the backdrop of
India receiving fresh information under Tax Information Exchange
Treaties (TIEAs), DTAA and the OECD automatic exchange route. Under
the scheme in the making, according to sources, the source of money
will not have to be disclosed but criminal action would be taken if
the assets or money stashed pertain to proceeds of crime. Official
sources said committee on blackmoney headed by the CBDT Chairman is
expected to discuss and decide on the proposal during its proposed
meeting later this month. Incidentally, an expert group on blackmoney
had earlier suggested that an offshore voluntary scheme may be
considered by the government to collect tax on undisclosed bank
accounts and assets held by resident Indians abroad. Experts on the
subject said that such a scheme is prevalent and has been implemented
in many European countries, the US, UK, Germany, France, Greece, Italy
and Portugal among others. Sources said that now that the country's
efforts to revive and implement the various tax treaties have started
giving results, such a scheme could be operationalised as compared to
the earlier practise where it was very difficult to obtain bank
accounts and assets data of such a taxpayer. The nitty-gritty of a
such a scheme and the amount of penalty etc on the disclosure of such
funds stashed abroad could be worked at a later stage, the sources
said. The Central Board of Direct Taxes (CBDT) through the Income Tax
department has taken several measures in the recent past to update the
article concerning exchange of information in existing DTAAs to
specifically allow for exchange of banking information and information
without domestic interest. India has also decided to negotiate TIEAs
with priority countries and jurisdictions. In the last two years,
India has concluded negotiation of 16 TIEAs, 18 new DTAAs and
renegotiation of 21 existing DTAAs.