Gold rush at VDIS in the last days for turning black into white

Senior officials monitoring VDIS claim that with the deadline less than two weeks away, the scramble has already begun. Says Revenue Secretary N K Singh, “The scheme has met our expectations. And far from dampening the spirit of people, the political uncertainty and announcement of elections has given VDIS a new momentum. People feel they should take up a tangible offer rather than wait for an uncertain future.”

Adds A K Batabayal, Member (investigation) in the Central Board of Direct Taxes, “VDIS 1997 has been the most popular of the five or six such tax rebate schemes announced in the past. And we expect the declarations to peak in the last few days of the year.”

Therefore, the Income Tax department is on an over-drive and is now clearly using the carrot-and-stick approach with potential tax payers. Senior officials admit that their surveillance and search operations have been intensified with an eye on VDIS, so much so that trade associations in more than one city have lodged protests at the blatant manner in which “arm-twisting” was being done to force people to partake the 30 pc tax bonanza which the scheme offers.

On the other hand, a massive nation-wide canvassing programme is underway. Income Tax Commissioners all over the country are back-to-back with meetings with representatives of trade and industry.

N K Singh, too, has spent most of December meeting chambers of commerce and industry in Calcutta, Bangalore Pune and Mumbai. More such trips are scheduled for later in the month to have an interface with tax payers and allay their fears of disclosure of identity and harassment.

As the Revenue Secretary puts it, “The meetings have helped a great deal in clearing misgivings about VDIS. Of course, at some places, there were frayed tempers about the frequent modifications in the scheme and allegations of widespread misuse.” When asked about the extent of such misuse, he described it as “not inconsequential”.

Senior IT officials admit that the most blatant manipulation and misuse occurred in the first fortnight of November and mostly centered on false declarations of silver. On October 3, the IT Department had issued a clarification stating that silver articles and utensils, too, could be declared under VDIS along with a simple affidavit stating the date of purchase. What followed was an unprecedented silver rush, with utensils weighing thousands of kilograms being declared in Calcutta alone. When the misuse gained serious proportions, a further clarification was issued by the department.

A circular to all Commissioners dated November 25, stated that if silver had to be declared, its value should be taken at April 1997 prices. And for those who had already made substantial declarations of the metal, further proof of purchase would now be required. All Commissioners were asked to look for such “unusual” cases and ask declarers to submit the documents — or pay up income tax at normal rates.

The trend during the last few days of the VDIS appears to have been in favour of declarations of hard cash and gold jewellery. In New Delhi, cash receipts of up to Rs 10 crore have been received from one family. For declarations of gold jewelry, the cut-off date of purchase was fixed at April 1987. The tax slab thus came down to around 15 per cent.

Also, after verbal clarifications that declarations by Non Resident Indians would not invite any action under the Foreign Exchange Regulation Act , substantial foreign remittances have begun pouring in. The only area where there has not been much declarations is property. “We know huge amounts of black money have been converted into real estate. But, so far, people have failed to come overboard by declaring their immovable assets,” said an official.