Despite the extremely generous nature of the VDIS scheme, disclosures in the first half of the year were meagre. Since then, according to the revenue department, disclosures have been substantial. It is reasonable to ask why. Income must either be consumed or converted into assets. Once consumed, there is no need to declare it; there is no way the income tax department can find out how it was earned. It is only if some assets are built up with undeclared income that it would be disclosed; at that point, the undeclared assets must also be disclosed.
The undeclared assets are commonly in the form of gold and jewellery, whose price would depend on when they were bought. It is possible for a tax evader to predate the year of their purchase, and thereby to undervalue them as well as the undeclared income they represent. By doing so, he can get away by paying much less than the 30 per cent tax he is supposed to pay. Once tax evaders discovered this, there was a flood of declarations of gold and jewellery. Soon they ran short of gold and jewellery, and started scrounging in their homes for pickings. Some declared diamond dust, others silver utensils, while the rest raided their childrens collections of antique coins.
At first, the income tax authorities were overjoyed by the sight of blackmoneywallahs coming clean, and issued one notification after another giving tips about what to declare and how. Soon, however, the cynical side of the taxmans mind prevailed. The Central Board of Direct Taxes has recently declared that in cases of unusual declarations (whatever that might mean), gold and silver articles would be treated as if they were bought on April 1, 1997 unless the tax evader could furnish proof of the year of acquisition. For acquisitions out of black money, there can be no genuine proof of purchase. So even those tax evaders who honestly declared the correct year of acquisition will have to cough up a lot more than was legally due from them.
This shows that ill-begotten wealth will finally bring its owners retribution at least, the income tax authorities will try and ensure that it does. It will also teach tax evaders not to believe the government when it offers them a sweet deal.