India Today Cover Story [VDIS: The Great Disclosure Pg 3]

Initially it was political opposition. Then the Government collapsed. Throughout the VDIS' six-month span, Revenue Secretary N.K. Singh was at its helm -- making sure it steered clear of controversies, sorting out ambiguities and using persuasion and coercion. Excerpts from an interview with Senior Editor Sumit Mitra and Special Correspondent Shefali Rekhi:

In the short term, it will help mitigate the fiscal weaknesses of the system and garner resources. For the long term, it has brought unproductive assets into the mainstream which will help growth. It has also helped build up a climate of long-term compliance. And validate the proposition that Indians in general are law-abiding citizens.

Most of the declarants are existing assessees. But the tax-widening exercise is going on independently, in tandem with VDIS. In the 11 cities identified, the matching exercise on the four criteria is complete. And identified people should be getting their letters by February. This year I expect the number of assessees to go up by 33 per cent and in three years we are working to double the number to 2.4 crore assessees.

There are many other ingenious ways in which unproductive assets can be garnered into the mainstream. On amnesty schemes, the Government has said before Parliament and in the Supreme Court that this will be the last one of its kind.

Should anything else have been done to encourage corporate black income disclosures?

Yes, corporate disclosures were quite small, probably because companies were looking for some additional features which were not there in the scheme. But I don't think the scheme could have been fine-tuned any more.

Political slush funds were left untouched because there was no immunity to those charged under the Prevention of Corruption Act.

It has been this way in all the past schemes. I don't think it is right that someone who has abused public office should be allowed to come under the purview of such a scheme.

I am duty-bound to honour the confidentiality commitment. Confidentiality has been a constant feature in all past schemes.

PAST SCHEMES: A HISTORY OF FLOPS

1951: VDS Tyagi Scheme: Focus on tax arrears. Then minister of state Mahavir Tyagi for the first time gave immunity to those paying up taxes. Disclosure: Rs 70.20 crore. Tax collected: Rs 20 crore.

1965: Two schemes. The Block Voluntary Disclosure Scheme was more successful as the sum declared was treated as a block separate from income declared in normal course. Disclosure: Rs 145 crore. Tax: Rs 19.45 crore. The second scheme, "Sixty-Forty", entailed a deposit of 60 per cent of the sum declared as tax. Disclosure: Rs 52.18 crore. Tax: Rs 30.08 crore.

1975: Voluntary Disclosure Scheme: Marginal tax rate brought down from 97.75 per cent to 77 per cent. Slab rates prescribed based on quantum of disclosure. On undisclosed income of up to Rs 25,000, tax levied at 25 per cent; Between Rs 25,000 and Rs 50,000 it was 40 per cent; and above Rs 50,000 it was pegged at 60 per cent. In addition, 2.5 per cent of sum declared had to be invested in government notified assets. Disclosure: Rs 744 crore. Tax: Rs 241 crore. The government was so delighted with the response that it announced one month's extra salary as bonus for all it officials.

1985: Amnesty Scheme: Disclosed wealth taxed at notified rates. Tailors, beauticians, shopkeepers, and even housewives responded overwhelmingly. Disclosure: Rs 10, 778 crore. Tax: Rs 500 crore.

January 12, 1998