The Modi government get handsome Rs 20,000-25,000 crore in taxes and penalties under a special three-month compliance window

• The Modi government could net a handsome Rs 20,000-25,000 crore in taxes and penalties under a special three-month compliance window opened in early July for Indians to reveal their undeclared overseas wealth,
• people aware of the trend in these disclosures told FE.
• Such wealth declared by the people who used the window could be over R40,000 crore.
• The substantial additional tax collections via this limited compliance window, sources said, would offer a peek into the mammoth size of India’s black economy, which still remains largely veiled.
• Taxes and penalties collected from users of the compliance window under the new black money law would also help the Centre in fiscal management.
• It needs to bolster public expenditure to spur economic growth, even as it is constrained by the emerging liabilities from the recently announced one rank, one pension policy for the armed forces and the additional budgetary allocations promised for recapitalization of public sector banks.
• The current compliance scheme is for bringing out only hidden foreign assets of Indians, whereas the black economy has a substantial domestic component too (the Voluntary Disclosure of Income Scheme of 1998 had accepted declarations of unaccounted wealth of more than Rs 7,000 crore held by about 3.5 lakh people).
• Also, the latest disclosures might only be a fraction of even the unaccounted money stashed abroad.
• Although the disclosures under the current compliance scheme would have to made latest by the end of this month, the tax and penalty collections could be completed by December.
• The compliance period offers a chance to avoid 120% penalty and three to seven years’ rigorous imprisonment provided for in the Undisclosed Foreign Income and Assets (Imposition of Tax) Act brought in this year.

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Black money may be govt’s white knight