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Taxmen in Overdrive to Meet Stiff Targets to Recover Black Money

In another 48 hours, the Income Declaration Scheme 2016 ends. What will happen next?

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India
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Taxmen have turned the heat on traders and small businesses to make them declare hitherto undisclosed income under the Income Declaration Scheme (IDS). The scheme is set to come to an end in another 48 hours and with it, the window to declare illegal wealth without inviting prosecution.

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Eager to shore up its image by cracking down on black money before the crucial assembly elections in Uttar Pradesh, top government functionaries are putting pressure on income tax officials to go a few extra miles to meet the target.

“With the 30 September deadline closing in, the pressure is percolating down from the top. Even in the normal course of work, if we find some evasion, we are made to inform the defaulter to declare their income under IDS,” says a highly placed source in the Income Tax Department.

Discussions with tax consultants reveal how officials are conducting searches and inspecting books on the pretext of issuing summons. All this to spook businessmen into paying up.

The target set for tax disclosure under the four-month-long scheme is a steep one lakh crore rupees. But according to reliable sources, just one-tenth of the target has been achieved so far.

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Appeals

Revenue Secretary Dr Hasmukh Adia’s Twitter timeline suggests that the entire government machinery is working overtime to ensure the Income Declaration Scheme (IDS) is a success. In June this year, Modi’s ‘Mann ki Baat’ appealed for a more transparent regime.

“How is it possible,” he asked during his weekly radio address, “that out of a population of 125 crore, only 1.5 lakh have an income of more than Rs 50 lakh? We see people with houses worth Rs 1-2 crore but their declared income will be lesser. This needs to be changed before 30 September.”

But radio ads and press releases have been largely ignored. Until now.

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 In another 48 hours, the Income Declaration Scheme 2016 ends. What will happen next?
(Graphics: The Quint/Rahul Gupta)
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Threats

Realising that appeals have not worked thus far, Income Tax officials have begun to go beyond that. According to reliable sources, a Tax official, during a routine meeting with a group of seventy-odd traders in Kolkata, issued instruction to cough up a certain amount of money in taxes or else prepare for raids come 1 October. “I won't be surprised if something like this happened,” the official said.

Meetings with industry associations are a norm to issue clarifications, air grievances and address sector-specific issues. Not to “encourage” traders to pay taxes by prodding them to do so.

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 In another 48 hours, the Income Declaration Scheme 2016 ends. What will happen next?
(Graphics: The Quint/Rahul Gupta)
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Plan-B

“You can expect the investigation wing of the Income Tax department to become very active after the 30 September deadline lapses,” the senior official said.

So far, the Income Tax department functioned on the premise that you go after the big businessmen and the small ones fall in line. Fact of the matter is, the Income Tax department does not even have the resources to conduct so many raids.

But now the direction is to go after the smaller businessmen who have so far evaded the tax net. The follow-up action is not going to be limited to big cities like Mumbai, Delhi and Ahmedabad, but has spread to even smaller ones like Jallandhar and Meerut.

This fear was perhaps echoed by Delhi Chief Minister Arvind Kejriwal in his open letter to Prime Minister Modi.

Shopkeepers and traders across the country are terrified of your new income tax declaration scheme. There is news that the roadside vada pav and jalebi stall owners are being raided by Income Tax officials and that you have given orders for over one lakh small traders to be raided in October.
Arvind Kejriwal’s open letter to PM Modi

According to reliable sources, so far, only Rs 10,000 crore has been declared as opposed to the set Rs 1,00,000 crore target.The government is hoping to bring in approximately Rs 25,000 to Rs 30,000 crore in taxes.

According to media reports, Rs 15,000 crore has been disclosed so far under the Income Declaration Scheme bringing the government a revenue of 6,750 crore.

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