The Karnataka circle of income tax department has raised close to Rs 4,000 crore so far (a majority of it coming from Bengaluru) from the Income Declaration Scheme (IDS), which expires on Friday. So far, the all-India figure has been pegged at Rs 35,000 crore.
Highly placed official sources in the Central Board of Direct Taxes told media that the Karnataka circle will cross Rs 4,000 crore by the end of this month. This means, the state would have contributed more than 10 per cent to the country’s total collection.
WHAT IS IDS?
To bring out undisclosed income and assets, the Union government introduced the Income Declaration Scheme in June. It invited Indians with undeclared income and assets to come clean and pay a tax of 45 per cent. Once declared, the scheme gave them immunity from prosecution and inquiry. The last one month saw a good turnout of taxpayers who declared their undisclosed/ benami properties under the scheme, all thanks to the new Cost Inflation Index (CII), introduced a few weeks ago.
The IDS gives immunity to benami property holders from the Benami Transaction (Prohibition) Act 1988, which empowers authorities to confiscate properties. The Act also allows for imprisonment of up to seven years.The property cost indexation is all about fixing slabs for the respective financial years vis-a-vis the inflation, to arrive at a decent value for the property — a simple calculation is if a property is purchased 10 years ago for Rs 1 crore, the property cost now would have appreciated to nearly Rs 10 crore.
As per the IDS scheme, 45 per cent is the tax plus surcharge and penalty one has to pay to regularise his/her undisclosed property. Going by that rate, considering the property appreciation, 45 per cent will work out to be too heavy. So an index has been fixed to calculate the property price on which tax is paid.
Nutan Wodeyar, income tax chief commissioner (Karnataka and Goa circle) told media that the cost indexation scheme was a game-changer in IDS after which the response swelled. “In fact, we are keeping our counters open till the midnight of September 30 for last-minute gate-crashers. When IDS was introduced, for property declarations, a percentage of fair value of market value of properties was taken into account. But in mid-August, the Central Board of Direct Taxes rolled our property cost indexation scheme that is now bringing in more declarations,” Wodeyar explained.
Apart from real estate players and joint development partners, actors from Kannada film industry, politicians and traders have come out under the scheme. In the last four months, more than one lakh letters were issued to people whose information was available with the department for suppressing income, asking them to pay up.
The process also caught some property owners off-guard. “Many came to us in shock and informed us that they had not sold their properties [as claimed by the letter they had received]. Upon checking, we found that their properties were transacted without their knowledge,” said Wodeyar. The I-T investigators also kept a close watch on cash flow in banks and analysed information passed on by financial institutions. Any cash deposit of up to Rs.10 lakh or more a month (can be cumulative too) was studied and tracked by the Financial Intelligence Unit.
“This scheme came with complete confidentiality, no questions asked about the source of tax or any other details. It also had a lot of benefits for people. In one shot, taxpayers could pay tax on undisclosed incomes and come out clean,” pointed out Wodeyar. In the all-India revenue inflow of income tax collection, Bengaluru has taken the second slot after Mumbai. In the first quarter of 2016, Mumbai’s tax collection was Rs 37,864 crore and Bengaluru managed to mop up Rs 21,488 crore.
Credits Bangalore Mirror