VDIS ends on December 31. And, under tremendous pressure from North Block, the tension in income tax offices is almost palpable. Every day, regional chief commissioners are actually reviewing the situation several times.
There's a massive rescue operation in progress. The patient: VDIS. The disease: the rough and tumble of coalition politics. With 10 days to go before the scheme ends, the red carpet has been laid out for potential declarants. The government is trying just about every trick in the book, and some outside, to ensure that the targets are achieved. A little armtwist for a little extra revenue is only going to do good to the country, isn't it?
"It would be foolish to expect the political instability not to affect the pace of declarations," says a joint secretary-level official in the Central Board of Direct Taxes (CBDT). It was no surprise, therefore, that when finance minister P. Chidambaram was addressing the Gujarat Chamber of Commerce last week, there were demands that the scheme be extended till March next year, by when the political situation is expected to be clear.Chidambaram turned down the request.
When Sitaram Kesri began threatening to pull the rug from under the Gujral government, VDIS collections immediately faltered. Many tax evaders felt—and feel—unsure whether a new government and a new finance minister would respect the oath of secrecy that Chidambaram's North Block has taken about identities of declarants. Collections have slowed, and the government requires a massive push to reach its target, which is Rs 15,000 crore of declarations, and Rs 4,500 crore of taxes.
Till the end of October, it was smooth sailing, with TV commercials trying to talk logically to tax evaders. Today, the ads have taken on a distinctly threatening undertone, mentioning the "last chance" about to become a "lost chance." The VDIS-sponsored action replays in the Sharjah Cup can be seen as a surreal hint that there won't be any replays of VDIS, come December 31. Officials are urging declarants to come up with even more and coaxing potential ones to come clean. "In several cases, we have told the businessmen that they could face prosecution for not having declared the hidden income of the earlier years," says a senior CBDT official. Most certainly, there is nothing voluntary about such a disclosure of income.
The high income group is being targeted around the country. In Delhi, farmhouse owners have been threatened with action if it was found that returns filed by the owner did not reflect the sort of income which could enable them to purchase such huge properties. Telephone subscribers, house owners, recent car buyers are receiving polite letters asking them to file returns if they have not already done so. The underlying message is: "Declare, or else." The CBDT has issued nearly 60 clarifications on the scheme, which works out to more than two clarifications per week. Individuals and companies have been allowed to make their declarations now and pay up by March 1998, with an interest of two per cent per month. The finance minister has also directed all public sector banks to give short-term loans against fixed assets so that businessmen who intend to come clean do not let go of this opportunity for want of liquidity.
But these repeated clarifications have caused a different problem. An official with the western region of the Directorate of Investigation (Income Tax) says that some people who had been coaxed into coming clean were discouraged by the Commissioner of Income Tax. "Some clarifications are expected to come in the next few days. Could you please come after that?" the commissioner is reported to have told evaders who wanted to turn legit. Our advice, though, is don't wait for any more clarifications.
