No relaxation in voluntary disclosure scheme: FinMin

The government on Saturday said it has not come out with any Voluntary Disclosure of Income Scheme (VDIS) by proposing changes in the Income Tax Act, which experts believe are some sort of concessions to tap black money.

"There is no intention of the government to give any sop in form of voluntary disclosure... We are tightening provisions, we are not relaxing provisions," Finance Secretary R S Gujral said, when asked about reports that government has sought to bring in a VDIS through back door. Finance Minister Pranab Mukherjee, in his Budget speech, had proposed a series of measures to deter generation and use of unaccounted money, which included taxation of unexplained money, credits, investments and expenditures, at the highest rate of 30 per cent irrespective of the slab of income.

Tax experts, however, said the government is giving an option to erring tax payers to admit unaccounted money at early stage and pay 30 per cent tax. "The government is giving an option that if you admit at an early stage, then you do not have to go through all the proceedings. The government is trying to reduce the litigations by giving concessional way for bringing back money", said Ernst & Young Tax Partner Hitesh Sharma.

Another expert, who did not want to be named, said the government hopes confiscatory penalty would force people to disclose black money. "It thinks that this measures will give the IT department option to arm twist the offenders. It is a kind of 'carrot and stick policy' to discourage evasion," he said.

Gujral said currently if unaccounted money is found with a person in an I-T raid, the person usually says that he was about to declare it in next income tax return.