VDIS may rescue Chidambaram's opus
Chandra Shekhar
NEW DELHI, Jan 2: The Voluntary Disclosure of Income Scheme (VDIS), which gave tax evaders a chance to come clean, will save the 1997-98 budget and help the government maintain a semblance of fiscal prudence.Revenue secretary NK Singh, who was busy totalling the collection figures pouring in from all corners of the country, told The Financial Express that the disclosures would be mentioned in the budget under a new head. Singh said that that 77.5 per cent of the collection, as promised by finance minister P Chidambaram in his budget speech, would be transferred to the states in the next financial year. This would mean that the 1997-98 budget's revised estimates would show the collections as receipts without a commensurate outflow to states. The accounting exercise would help the government to balance the budget to the extent of additional collections under VDIS. For budget purposes, this would partly offset overshooting of expenditure on account of various post-budgetary
commitments. However, on the other hand, there would be a windfall gain for the states and union territories in 1998-99 on account of such deferred payments. The states can expect to get around Rs 8,000 crore (including arrears) on account of the new formula for devolution tax proceeds as suggested by the 10thFinance Commission and 77.5 per cent of the amount declared under the VDIS. The finance ministry mandarins and the new government would have to apply their minds to take care of hefty outgo to states in the next fiscal. As far as the collections under VDIS were concerned, revenue secretary Singh, who was still preparing the final figures to be released by finance minister Chidambaram at his press conference on Saturday, said that the total realisation would far exceed Rs 5,000 crore, which was the upper estimate of the ministry. More significantly, Singh said, the number of declarants would be more than 2.5 to 3 lakh. This manifested that, not only the rich, but a large number of persons belonging
to middle segment of society had taken advantage of the scheme to come clean. According to Singh, "the results suggest that the scheme has met with a strong positive response and has over-fulfilled the targets and expectations." Not only in metropolitan cities, but people in small towns too responded to the scheme. The assets declared under the scheme include cash, jewellery, precious stones, silver, real estate and other mode of movable and immovable assets. A satisfied Singh said "the basic objective seems to have been realised. "The success of the scheme, he said, "was mainly on account of the tax reforms and the rates which were significantly reduced in the last budget". The response to the VDIS was also a manifestation of the fact that people were by and large law abiding and evaded taxes because the rates were irrational earlier, Singh added. The revenue secretary further hoped that the VDIS, which has created awareness about payment of taxes, would usher in a new culture of tax compliance and
check the tendency to evade taxes.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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