Demonetisation: Income disclosure schemes 20 years apart yield roughly the same

Adjusted for inflation, the earlier scheme would have collected Rs 25,000 crore, according to Soumya Kanti Ghosh

Union Finance Minister Arun Jaitley’s Income Declaration Scheme (IDS) 2016 will collect a little over Rs 30,000 crore in taxes, whereas former finance minister P Chidambaram’s Voluntary Disclosure of Income Scheme (VDIS) in 1997-98 garnered around Rs 10,000 crore in taxes.

Adjusted for inflation, the earlier scheme would have collected Rs 25,000 crore, according to Soumya Kanti Ghosh, chief economist, State Bank of India. This works out to an inflation rate of five per cent a year for the last 19 years.

The tax rate, including cess and penalty, in this year’s income disclosure scheme was higher at 45 per cent against 30 per cent for individuals and 35 per cent for companies in 1997-98.

Assuming mostly individuals availed the VDIS in 1997-98, the scheme would have garnered Rs 37,500 crore for the exchequer in today’s rupees if the tax rate were 45 per cent.

The 1997-98 scheme saw disclosures worth Rs 33,679, which in today’s rupee terms work out to about Rs 84,000 crore. About 475,000 individuals and companies had disclosed their unaccounted wealth and income in the scheme.

In 2016, the government received declarations from 71,726 individuals worth Rs 67,382 crore. The tax under IDS 2016 is to be paid in three installments till September 30, 2017.

The tax department has rejected two disclosures in this year’s scheme: Rs 13,500 crore by a businessman in Ahmedabad and Rs 2 lakh crore by a family in Mumbai.

Jaitley had earlier refused to compare tax collections under the two schemes, stating many assessees had paid tax in advance during the 1997-98 scheme because the scheme’s tax rates were the same as normal rates.

The government has come out with another income declaration scheme, the Pradhan Mantri Garib Kalyan Yojana, following demonetisation, allowing declarers to pay a 50 per cent tax on undisclosed income and depositing a quarter of the amount for four years.(more)

Ishrat Jahan controversy: Why BJP has hit political potluck against the Congress

The Bharatiya Janata Party (BJP) has for long pointed out how several Congress leaders are yet to be punished for their alleged role in the anti-Sikh riots of 1984 or even the several cases of suspected ‘fake encounters’ approved by successive Congress governments at the Centre and in states. In contrast, the BJP’s Gujarat government, earlier led by Narendra Modi, has been hounded for the anti-Muslim riots of 2002 as well as the Ishrat Jahan fake encounter of 2004.

The BJP has cleverly exploited this analogy to paint the Congress and the intelligentsia that supports the party as the villains, while Modi and BJP President Amit Shah as victims. In the case of Ishrat Jahan, the BJP has alleged that it was a conspiracy hatched by Congress President Sonia Gandhi and executed by then Home Minister P Chidambaram to target Modi.

That at least two probes, including one by the Central Bureau of Investigation, found the encounter to be staged is quickly brushed aside. The probe had drilled holes in the Gujarat police theory of Ishrat, a Mumbai college student, being a Lashkar operative. The Congress, given its low credibility currently, has struggled to put forth its point of view.

Read more from our special coverage on "ISHRAT JAHAN"

• Ishrat Jahan case: BJP asks Sonia Gandhi to take responsibility
• Ishrat Jahan case: BJP attempting to dilute fake encounters issue, accuses Congress
• Ishrat Jahan case: BJP, govt attack Congress, Chidambaram over affidavit issue
• CBI court rejects plea to inspect 2nd Ishrat charge-sheet
• Congress alleges cooked-up story given on Ishrat Jahan case

The BJP, at least since mid-February, has effectively used the Ishrat Jahan issue to put the Congress leadership on the defensive. It has kept up the heat on the issue ever since Lashkar-e-Tayyeba operative David Coleman Headley suggested that he had heard about Ishrat Jahan, the 19-year-old girl who was gunned down by Gujarat police in June 2004.Read More.