| The finance ministry is considering a one-year “mini-amnesty” scheme for income and corporation tax defaulters.
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| Under this scheme, North Block may waive both interest and penalty for defaulters and an announcement to this effect is expected in Budget 2008-09 due next month, according to a senior finance ministry source.
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| The proposal offers a waiver from the 12 per cent a year interest charged under sections 234A, 234B and 234C for defaults in furnishing tax returns, paying advance tax and deferring advance tax respectively.
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| There is currently no provision in the Income Tax Act to waive interest except in limited cases. The Act is likely to be amended to facilitate this temporary waiver.
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| However, the Act provides for a penalty waiver. Penalty is charged up to 300 per cent on tax and interest amount for defaults in direct tax payments.
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| The last such amnesty scheme was offered in 1997 when income-tax defaulters were given an opportunity to disclose their income at prevailing tax rates and immunity from major economic offense laws.
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| It was effective for six months and garnered around Rs 10,000 crore. Though it faced criticism, it was the first such scheme to yield results.
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| This scheme is of a piece with the ruling United Progressive Alliance's common minimum programme that calls on the government to devise an innovative scheme to unearth black money.
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| With direct taxes growing at a historic high of over 42 per cent and likely to cross Rs 3,00,000 crore in 2007-08, the objective of this move is aimed at improving compliance rather than meeting a resource crunch. |
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