Black money for social schemes

Scheme may be modelled on PM's Relief fund.

The government is likely to announce a scheme to channel black money into a dedicated fund, which could be used for funding the government's social sector programme. The fund, which may be announced in the Budget for 2005-06, could be modelled on the lines of the Prime Minister's Relief Fund.

Government sources said the revenue department was contemplating various other strategies. One option would be to issue bonds to raise funds for infrastructure and social sectors, which would not yield any returns in the initial few years.

Officials said a scheme on the lines of the Voluntary Disclosure of Income Scheme 1997, launched during P Chidambaram's previous stint as finance minister, was ruled out.

"The finance minister has asked officials to think of new measures to tap black money," an official said.

The Central Board of Direct Taxes had earlier this month set up an expert committee to recommend special schemes to unearth black money and assets. The committee headed by the director-general, investigations, is expected to submit its report to the board soon.

The committee has been mandated to recommend both enforcement measures and schemes for voluntary disclosure.

A key reason why the United Progressive Alliance is displaying urgency in introducing measures to tap black money is that its National Common Minimum Programme spells out that a "special scheme to unearth black money and assets will be introduced".

The issue was also discussed recently when Prime Minister Manmohan Singh undertook a review of the progress made on the the programme's objectives.

The department has already taken several measures to bring unreported income within the tax net and check the flow of black money. Cash gifts --- barring those received at the time of marriage --- received from an unrelated person in excess of Rs 25,000 have been brought into the tax net.

The revenue department, which has already begun work on the Budget, is focussed on a three-tier objective: expand the tax base, increase compliance and make the tax administration more efficient.

On the parallel track
Govt gets cracking

The finance minister has asked officials to explore new measures to tap black money, says a source

The CBDT earlier this month set up a committee to recommend special schemes to unearth black money

Why the hurry?
The government needs cash to fund its National Common Minimum Programme

How big is black?
The CVC says that in 2000 around 40% of the economy was black

Past Performance
The Voluntary Disclosure of Income Scheme, 1997, netted Rs 10,050 crore