MUMBAI, November 16: At a seminar on taxation (IT Bill 1997) organised by the Institute of Chartered Accountants of India, the finance minister virtually threatened dishonest tax payers by announcing that those who do not pay the rightful dues to the tax department would be sent to prison. Despite all this, VDIS-97 has not been able to take off as expected. This is because of the confusion and lack of confidence among the people about their fate after they make a declaration. As a result, the board has issued some more clarifications on some of the important matters to clear the confusion.

On silver utensils

References had been received from several Commissioners as to the treatment to be given regarding disclosure of silver utensils and other articles, which are not covered by the definition of jewellery like gold/silver coins, watches. The law, as it stands now, does not prohibit declaration of silver utensils or other assets, which are not covered by the definition of jewellery at the value at which they were acquired. Therefore, in all cases of such declarations, the assessee should be asked to file an affidavit indicating period of acquisition of the articles and also the number/weight of these articles and on receipt of this affidavit, declaration should be accepted and a certificate issued as per law (Document No. 3760/M/INV-VDIS/97, dated 3.10.1997).

On where declared jewellery is claimed to have been sold

Instances have come to notice where declarants have declared jewellery, but have also claimed that they had sold it prior to the date of declaration. According to the scheme, the declarant has to declare the asset that he holds at the time of making the declaration. Therefore, such declarations are contrary to the provisions of the scheme. Such cases of declarations should not be accepted. Necessary instruction may be issued to the Commissioners (Do. No. 3965/M/INV-VDIS/97, dated 16.10.1997).

On diamonds and valuation of jewellery

It has been brought to the notice of the Chief Commissioner, Mumbai, that under the VDIS, some disclosures are being made in terms of ``packet of loose diamonds'' giving gross weight of these diamonds. This has raised some confusion, leading to complication in the issue of certificates for such declaration.

The matter has since been examined and looked into by the CCIT. I am directed to say that under Rule 8D of the Wealth Tax Rules, the valuation report in respect of jewellery, including precious metals (diamonds), is required to be submitted in Form 0-8 of Wealth Tax Rules. Further, the prescribed form for statement of valuation of jewellery is given in Form No. 0-8A of the WT Rules. This form also requires mention of the value of each precious or semi-precious stone (CC/CO-OFDN./PRO/VDIS-Q/97-98, dated 10.10.1997).

On calculation of interest

Doubts have been raised as to the method of calculating interest on delayed payment of tax under VDIS-1997. The matter has been considered by the Board and it is decided that a period of 30 days will constitute a month and to be calculated with reference to the date of filing the declaration. However, for a period short of 30 days, interest will be charged for the entire month. The following example will clarify the position:

`A' files declaration on 25.8.1997 and pays taxes on 3.10.1997.

In this case, the period of delay will be reckoned as under:

25.8.1997 to 24.9.1997 -- one month

25.9.1997 to 3.10.1997 -- part of a month. However, interest will be charged for the whole month. Thus, in the above example, A will have to pay interest for two months (Do. No. 3953/M/INV-VDIS/97, dated 15.10.1997).

On income declared to be computed as computation as per IT ActThis is with reference to the Voluntary Disclosure of Income Scheme-1997, it is clarified that:

* axes can be deposited in more than one installment, but declaration must be one.

* VDIS can be availed of for the income earned during any period from assessment year 1962-63 to the current year.

* Where the amount has been spent, the declarant must mention in the declaration form the fact, accordingly.

* Income to be declared is as per income computation under the IT Act. While deductions allowed under the IT Act can be considered in computation of the income, no rebate of tax is permitted.

(Clarification issued by the AK Batabyal, member, CBDT in a letter to the Editor (ET))

It is suggested that to make the scheme a success in a short time, the ministry should make efforts to gain the confidence of the people to make them come forward, instead of threatening them.

The Jindals are Delhi-based chartered accountants

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