No flood, only a trickle of black-money

The tepid response to the one-time compliance window opened under the anti-black-money law has left the Centre frustrated.

Only 638 declarations involving unaccounted foreign assets of ₹3,770 crore were received till Wednesday (September 30), when the three-month window closed, official data showed.

Considering the speculation about the extent of black-money stashed abroad, the declarations have been lower than expected, which is disappointing, said tax experts.

Lack of communication For the poor response, tax experts blame the government for lack of better communication about the compliance window and for making the declaration expensive. Absence of assurance on aspects such as confidentiality led to a low response, they said.

The 638 declarants now have to fork out tax at the rate of 30 per cent and penalty at 30 per cent by December 31, 2015. This will mean an effective impost of 60 per cent, enriching the exchequer by ₹2,262 crore by December.

The response was disappointing given that the Modi-led Government had shown eagerness in tackling the menace of black-money stashed abroad by appointing a Special Investigation Team and enacting a stringent anti-black money law. With the compliance window shut, any unaccounted foreign assets unearthed hereon can attract a penalty of 120 per cent and imprisonment up to 10 years, say tax experts.

“The response under the compliance window is extremely disappointing (from the government’s point of view) and unfortunate (opportunity loss for those people still having unaccounted foreign assets),” said Rakesh Nangia, Managing Partner, Nangia & Co, a Chartered Accountancy firm.

Rahul Garg, Partner-Direct Tax, PricewaterhouseCoopers, said the response was “sub-optimal”. “It was considered expensive to come forward and make the declarations. Also, more assurance was needed on aspects like confidentiality and restricted use of information,” Garg told BusinessLine .

Girish Vanvari, National Head of Tax, KPMG, said the low response can be attributed to uncertainty of the process and the lack of clarity. There is certainly a case for extension of the deadline for disclosure under the black-money law.

“Expectations were of a much higher number. The essence would be to have enhanced communication and more comfort around it for people to come out and make declarations,” he said.

Amit Maheshwari, Partner, Ashok Maheshwary & Associates, said: “This was on expected lines. Lack of trust in respect of keeping the information strictly confidential, onerous disclosures and valuation rules and insufficient time given to taxpayers have contributed to this.”