Voluntary Disclosure of Income Scheme
|Voluntary Disclosure of Income Scheme|
|Closed||31 December 1997|
The Voluntary Disclosure of Income Scheme (VDIS) was a very unconventional but successful step among Indian economic policies. It would give an opportunity to the income tax or wealth tax defaulters to disclose their undisclosed income at the prevailing tax rates. This scheme would also ensure that the laws relating to economic offences would not be applicable for those defaulters. Over 350,000 people disclosed their income and assets under this scheme, which brought a revenue of ₹78 billion (US$1.2 billion) to the Indian finance ministry. The scheme was closed on 31 December 1997.
Success of the scheme
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VDIS succeeded more than the Indian finance ministry expected. Over 350,000 individuals, and a few companies and firms, disclosed their undisclosed incomes. The sequestered assets' worth was over INR 260 billion. With tax levied at 30 per cent of the disclosed asset, the inflow of around INR 78 billion to the treasury was a good one-fifth of what the government had collected in direct taxes in the past financial year. Seeing this success, then Union Finance Minister, P. Chidambaram commented, "It is my faith that, given a chance, the people of India come clean." He claimed that his team of income tax officials had caused INR 330 billion to turn white.
VDIS granted income-tax defaulters indefinite immunity from prosecution under the Foreign Exchange Regulation Act, 1973, the Income Tax Act, 1961, the Wealth Tax Act, 1957, and the Companies Act, 1956 in exchange for self-valuation and disclosure of income and assets. The Comptroller and Auditor General of India condemned the scheme in his report as abusive and a fraud on the genuine taxpayers of the country.