Professionals outnumber cos, trusts in declaring wealth during compliance period
Doctors, engineers and former senior managers who used to work overseas -these professionals formed the biggest chunk of those who made use of the 90-day grace period for the declaration of unaccounted wealth. The total amounted to Rs.4,147 crore, the government said on Friday, still below the expectations of experts.There's no split available on how much these individuals accounted for but they dominated in terms of number of filings, exceeding those by companies, trusts and Hindu Undivided Families, said officials who didn't want to be named. But some of these declarations may have been made because of fear and confusion, said tax advisors. The individuals wanted to play it safe, preferring to pay 60% in combined taxes and penalties, rather than getting entangled in the harsh new law on black money .
One of them was a senior executive who was posted abroad. “I had advised him to just go to the income tax department and declare the assets as the money earned was through legal means. However, he feared harassment in future,“ said a tax expert.
In such cases involving Indians who have returned, the declarations may not be related to black money but income and investments made when they were outside India.
“Many people who have declared their wealth are people who have moved back from overseas. Many of these are software engineers who were working in the US or other countries and are now settled in India. They are not people who have done anything wrong,“ said a tax advisor.
A software engineer who moved to the US in the 1990s with his family and returned about two years ago had about $500,000 in a US bank, some shares of New York Stock Exchange-listed companies and an apartment bought a while back. The engineer told his tax advisor that he preferred the confidentiality of the scheme, even if it came at a high cost -30% tax and another 30% penalty but with an assurance there would be no prosecution.
Two doctors based in Delhi declared assets of about Rs.13 crore. Their situation was different. They had invested money earned as consultancy fees in property in London at a time when India did not allow its citizens to buy real estate abroad.
PROFILE OF ASSETS
Tax and legal experts, who helped high net worth individuals with declaring their wealth, said the profile of assets has changed. “In 1997, under the Voluntary Disclosure of Income Scheme (VDIS), a lot of people had declared gold, cash and even property.This time around, most people declared money in bank accounts and shares of companies they held,“ said a tax expert with a law firm.
The government said Monday 638 people declared Rs.4,147 crore of previously undisclosed foreign assets during the three-month compliance window --an average of about Rs.6.5 crore. The highest declared ` amount by an individual was Rs.200 crore, according to people ` familiar with the matter.
Finance Minister Arun Jaitley and Economic Affairs Secretary Shaktikanta Das have warned that those who didn't declare their unaccounted assets during 90-day period should be ready to face the consequences, including taxes, penalties and prosecution.The law makes wrongdoers liable for rigorous imprisonment of up to 10 years.
Experts say many are seeking ways of putting tax officials off their trail.
The Economic Times, New Delhi, 6th Oct. 2015