Reassessment notices to VDIS declarants condemned

Persons making disclosures under the Voluntary Disclosure of Income Scheme (VDIS) of 1997, who paid over Rs 10,000 crore to the government, are a worried lot now a days as the income-tax (IT) department has issued notices to many of them for a reassessment of their returns for assessment year 1998-99.

In Gujarat alone, the department has served notices to over 3,700 of the 46,700 VDIS declarants.

"We have served notices to only those declarants, whom the department believes, have not filed returns for the assessment year 1998-99. This exercise is just to check if the declarant has filed returns for the next assessment year after VDIS of 1997. We are yet to receive response from these declarants," said U P Singh, chief commissioner of income-tax (I-T), Ahmedabad, told Business Standard.

Trade bodies in the state have urged the Union finance minister P Chidambaram to immediately intervene and see that such notices issued to thousands of tax-payers are withdrawn fothwith.

"The I-T department has grossly breached the assurance of complete 'immunity' and 'secrecy' announced by the Union government under the VDIS some seven years back. This move has breached the secrecy promise of the government given in 1997 and is unprecedented," said Chinubhai R Shah, president, Gujarat Chamber of Commerce and Industry (GCCI).

According to industry sources, this I-T move has come in the wake of the finance ministry setting up higher collection target for the department. The total budgeted collection for FY05 stood at Rs 4,951 crore in the Gujarat region, which is over 32 per cent higher than Rs 3,743 crore collected during FY04.

"Almost after a decade since financial year 1995-96, the budgeted target for collection was achieved in the last financial year due to big efforts made by the department in Gujarat. We are all geared up for even better collection in the current financial year," said Singh.

Gujarat accounts for over 7.5 per cent of the country's total number of returns filed with over four crore PAN card holders, but in terms of collection, it contributes only 3.5 per cent of the country's total tax collection.