CBDT panel for amnesty scheme to bring back black money

December 28, 2011 08:37 AM |
Moneylife Digital Team

The committee on black money, headed by the CBDT chairman, which met last week, considered among other suggestions, an Offshore Voluntary Compliance scheme on the lines of the one operated by the Internal Revenue Service in the United States

New Delhi: The government may announce an amnesty scheme for citizens having unaccounted wealth abroad and also permit taxmen to dig into income tax filings of past 16 years of suspected assesses, based on the suggestions made by a high-powered panel, reports PTI.

The committee on black money, headed by the CBDT chairman, which met last week, considered among other suggestions, an Offshore Voluntary Compliance scheme on the lines of the one operated by the Internal Revenue Service in the United States.

“We have suggested that an Offshore Voluntary Compliance scheme be brought in like in the US, whereby a person declares money kept in foreign accounts and pays the penalty on it, after which the money can be brought back into the country,” a top finance ministry official told PTI.

“We have also recommended increasing the review period of re-opening tax assessments to 16 years from six years now, but that may be only for money stashed abroad,” the official said.

Besides, the committee, which is slated to submit its report to the finance minister by 31January 2012, could also recommend changes in current laws to curb generation of black money within the country.

“A lot of black money is generated out of activities under the state’s control, like illegal mining, land deals, building construction, and in awarding contracts. We will suggest some changes in current law to tackle this menace,” the official said.

Under the Offshore Voluntary Compliance scheme, eligible taxpayers in the US who step forward do not face civil fraud and information return penalties. However, they still have to pay back taxes, interest and certain accuracy or delinquency penalties.

They can also escape criminal prosecution based on application of the revised voluntary disclosure practice.

Under the scheme in the US, eligible taxpayers have to file or amend their returns and pay interest and certain civil penalties, as well as the tax.

The interest and penalties depend on the amount of the unpaid tax liability, the years involved, whether a return was inaccurate or if a return should have been filed and was not.

Apart from the US, countries including the UK, Germany, France, Greece, Italy and Portugal also have similar voluntary disclosure schemes.