1. Recently, OECD Nations tipped off India on citizen’s black money. However, it may be a very difficult task for the tax administration to bring the black money to India with due process of law. The All India Federation of Tax Practitioners, in principle, is against any amnesty scheme which benefit the dishonest tax payers (All India Federation of Tax Practitioners vs. UOI) (1998) 231 ITR 24 (SC). However, some of the senior members of the profession are of the opinion that, to bring the unaccounted black money of citizens to tax net, the Government may consider introduction of “India Development tax relief Bonds-

2010” by taking due care that it will not discriminate againt the honest tax payers. It is desired that the following scheme may be debated and considered to unearth the black money of citizens which are parked abroad.

2. The Salient features of the scheme:-

1. Name: “The India Development tax relief Bonds-2010” or any other similar name which can have mass appeal.

2. Who can subscribe: Any person as defined under section 2(31) of the Income-tax Act, 1961, can be made eligible to subscribe to the scheme.

3. Exemption: Income may be fully exempt, no capital gain be charged, in case of the transfer by initial subscriber after a period of one year or on maturity. The gift of said bonds may not be included as income in the hands of recipients, and there may not be wealth tax on the value of bonds.

4. Immunity: Immunity must be given under Direct taxes, Indirect Taxes, FEMA, etc, with specific prohibition not to attach the Bonds, for any liability under the Central Acts, State Acts and no Seizure can be made under the search and seizure action under the Central and State Acts.

5. Discrimination between Honest tax payers and tax evaders:

A honest tax payer may be allowed to subscribe at 30% discount disclosing his source of income where as others who does not disclose the identity, the bond may be allowed to be subscribed at face value of the Bonds.

6. Option to subscribers: Option may be given to the subscribers to avail the interest annually or on maturity.

7. Duration of Bond: As it is, duration of bond may be 3 years or 5 years as the Government feel appropriate.

8. Monitoring of scheme: The monitoring of scheme may be done by Government or may be given to financial institutions with the Control of Reserve Bank of India. If it is given to financial institutions ,on the amount collected from the subscribers who have not disclosed the source, the financial institutions can pay 30% to Government immediately and the financial institutions will repay the amount to the subscribers on maturity by managing the remaining fund with them. There will not be any liability on the Government to repay to the subscribers. It will be the responsibility of the financial institution to repay to the Bond holders.

9. Drafting of scheme: The drafting of scheme should be given to the committee consisting of representatives from professional bodies such as Bombay Chartered Accountants Society, the Chamber of Tax Consultants, All India Federation of Tax Consultants, All Gujarat Federation of Tax Consultants, Indian Merchants Chambers, FICCI, ASSOCHAM, etc. The committee after due deliberations, visiting all important cities, interacting with the tax professionals and business community may draft the scheme. Once the scheme is drafted the same will be forwarded to the Ministry of Finance and Ministry of Law for their consideration and approval.

10. Publicity: Publicity of the scheme should be left to the Institutions which managed the scheme.

The Government need not spend the tax payers money to collect the 30% tax of unaccounted money.

11. Role of tax Department: The Department should play a positive role by giving assurance to the subscribers to the scheme that they will neither ask the source nor identity of the subscriber and that the bonds will not be seized in the course of any search action or will be attached for tax due.

3. In principle, I am against any Amnesty scheme. However, since the scheme has been conceived by senior members of the profession, it deserves a debate and consideration. The readers may debate and may send their constructive suggestions either for or against the scheme.

Dr. K. Shi varam
Editor-in-Chief