Three new schemes, courtesy the FM, in a move to declog and boost the economy
WILL finance minister Yashwant Sinha's Triple-S formula (Saral-Samman-Samadhan) to raise tax revenues by 30 per cent succeed? Especially the Samadhan scheme which is meant to speed up settlement of pending tax litigation. According to revenue secretary N.K. Singh, over 4.5 lakh cases involving Rs 40,000 crore, Rs 12,000 crore of which are stuck in roughly 1.5 lakh excise and customs cases alone, are still locked up in various stages.
Unbelievable though it may seem, Sinha's henchmen are in doubt, and in some cases, quite disapproving of the Samadhan scheme, which alone is expected to boost corporate tax collections by 35 per cent and more. Says a senior finance ministry official: "If finding a samadhan (solution) to such complex issues was so saral (simple), Yashwant Sinha's predecessor would surely have taken this step earlier." Points out his colleague in the income-tax department: "I would not comment on the scheme now since the finance bill has not yet been cleared. The government might even choose to withdraw the scheme." I-T department sources maintain that under the current provisions in the finance bill, the scheme will have to undergo several clarifications to plug the loopholes just like VDIS '97.
As the scheme takes shape after the broad contours were spelt out in the budget, memories of the VDIS, introduced by P. Chidambaram in 1996-97, are back. Says a senior officer with the Income Tax department in Delhi: "The Samadhan scheme is the fruition of the promise of the government that VDIS II would be introduced during the budget. At least, one promise has been kept and not withdrawn."
With the revenue department gearing up for the rush of industrialists and businessmen for Samadhan which opens on September 1, similarities between it and the VDIS are being drawn. Beginning with the advertisement budget itself: VDIS had a Rs 30 crore budget, with Rs 10 crore allocated to the Income Tax and Customs & Excise departments each to publicise the scheme. At Rs 5 crore a month till March, the advertisement budget for the Samadhan is about the same. Both promise amnesty and say that those who settle their cases now will not be prosecuted.
Singh, however, differs. Says he: "Samadhan is no amnesty and there is no forgiveness involved. There is no concealable tax and no question of any payment evaded. The amounts can be easily known through records. This is just a settlement scheme to declog the system and save time and money for the government."
Still, questions remain. For instance, Sinha had said that those facing prosecution for various revenue offences won't be eligible for Samadhan. Why then, will the policy governing the launch of prosecution proceedings be delayed till August 31? Is it just a coincidence that the scheme takes effect only after that? Also, with the markets and rupee crashing in the aftermath of a bad budget, will industry have any money to take up the government on its offer? Further, how will the dispute of the revenue department with public sector enterprises be settled? Won't the I-T department wonder about the source of money, if the settlement amount is too large? Already, the beneficiaries under the VDIS are believed to be under scrutiny.
Says an official who was present when the finance minister addressed senior I-T officers on June 19: "No one will come forward (for settlement) if he thinks he is on the right side of the law. Moreover, public limited companies will find it difficult to go for Samadhan fearing the wrath of shareholders. "
Ignoring the if's, however, there's no denying that the Samadhan scheme can indeed be a money-spinner for the revenue department. The number of cases being handled at present by the Custom, Excise and Gold Appellate Tribunal (CEGAT) is over 35,000. Another, 70,000-odd cases are being heard at various levels within the customs and excise establishments. The numbers for the income tax authorities are equally high.
Apart from Samadhan, there's also the Saral scheme, which envisages yet another simplification of the income tax return forms, modelled on the individual's tax return form in the US, which is very simple and comes with a guide which helps filling up the form. As Singh said, the simplification process started 20 years ago, and is yet to be completed. But with this, "we may be in the penultimate stage."
And then there is Samman, a reward for the honest taxpayer. The key question that's bound to surface: Will Samman be accorded to those who've disclosed hidden income under the VDIS last year?