Says he: "The hype about the success has overshadowed the grim realities of the amnesty scheme." According to him, comparing VDIS 1997 with the previous schemes is like contrasting apples with oranges. The value of the rupee in 1957 was 25 times higher than its worth today, hence, comparing the success of schemes in volume terms could be very misleading. He feels that the only appropriate method to evaluate its performance is with respect to GDP.
While the previous schemes have mopped up income in the range of 0.8 per cent to 2 per cent of GDP, VDIS 1997,at 2.3 per cent, has performed only marginally better. And that too because of the several loopholes which have been exploited by individuals. For instance, the fake leasing transactions adopted by several companies to claim depreciation being allowed under this scheme. Or the failure of the scheme to address the valuation of assets acquired in the early years out of concealed income, leading to massive declaration of, say, silver, and "reducing the effective tax rate to 2 per cent".
Bagai compares VDIS 1997 with an amnesty scheme attempted in Pakistan, which stated that the tax should be paid at 7.5 per cent on undeclared assets on market value as on June 1997. He decries the celebrations for an "insignificant achievement" and advocates a drastic cut in tax rates, as compliance by tax payers depends upon the reasonableness of the tax rate structure. Says he: "Any country that adopts such atrocious rates is bound to be flooded with black money."
