White Paper against tax immunity schemes

New Delhi: The White Paper on black money today virtually ruled out the possibility of a voluntary disclosure or gold deposit tax immunity schemes to unearth black money and bring back illegal funds stashed abroad. "…the issue of complete tax immunity (on gold deposit scheme) needs to be examined in light of other policy objectives", said the White Paper on black money tabled in Parliament by Finance Minister Pranab Mukherjee today.

Under the gold deposit scheme, which is being talked about in some quarters, the depositors parting with gold will get back the precious metal along with a nominal rate of interest. The scheme, the Paper added, also envisages complete tax immunity to the holders of unaccounted money who come forward to make the deposit in gold.

It further said that tax immunity schemes had been criticised for creating future expectations of similar schemes and resultant moral hazard. "In recent years, the general public sentiment is also perceived to be against giving any immunity to tax evaders who have parked their money outside India. While such schemes help in recovering some of the lost tax revenue, their overall feasibility needs to be assessed in this background", the Paper added.

It further said that voluntary disclosure schemes adopted by certain developed countries like the USA and the UK provided only partial benefits. "This option has been successfully adopted by some countries (USA, UK, France, Germany, etc.,). In these schemes, only partial benefits in the form of immunity from prosecution were made available in lieu of voluntary disclosure, as taxes along with lumpsum interest and penalty has to be paid," the Paper added.