An 'Income Declaration Scheme' was launched in India on June 01, 2016. Under the scheme, those who had evaded taxes were given the opportunity to avoid punishment by paying tax, penalty and cess totalling 45 percent of the undisclosed income. Up to October 1, 2016, declarants (64,275) declared approximately $97.5 billion. The scheme is expected to get approximately $44.8 billion as tax revenue from scheme.
Indonesia also introduced a tax amnesty scheme recently. The amnesty helped collect $7.45 billion during the first phase of the scheme which expired on September 30, 2016. Around 366,757 taxpayers signed up for the first phase of the scheme declaring approximately $277 billion. Pakistan can also benefit by introducing a scheme on similar lines to bring concocter money into the documented economy. The scheme may be inspired by the Indonesian model as follows:
Declaration filing date (1 January, 2017 to 31 March, 2017); clearance levy rate of 5 per cent for onshore assets declared and offshore assets declared and repatriated (if repatriated by 30 June 2017) and 10 per cent rate for offshore assets declared but not repatriated.
Declaration filing date (1 April, 2017 to 30 June, 2017); clearance levy rate of 7 per cent for onshore assets declared and offshore assets declared and repatriated (if repatriated by 30 September 2017) and 14 per cent rate for offshore assets declared but not repatriated. Declaration filing date (1 July, 2017 to 30 September, 2017); clearance levy rate of 10 per cent for onshore assets declared and offshore assets declared and repatriated (if repatriated by 30 September 2017) and 20 per cent rate for offshore assets declared but not repatriated.
He said proposed scheme will inject a fresh blood in the documented economy not only in the year of its implementation (due to repatriation of assets) but also for coming years as the income generated each year on assets declared will be charged to tax and will add to the reserves (ever if repatriation is not opted). Modus operandi and legal requirements will be followed.
Furthermore in addition to the scheme, a cap should be introduced to remit moneys outside Pakistan as available in India, ie, amounts to be remitted outside India are restricted up to $500,000 in a financial year. Moreover, 100 percent penalties may be imposed on transfer of moneys through informal channels, the member TRC added.