NEW DELHI: The Prime Minister’s Office (PMO) is monitoring the response to the four-month domestic black money disclosure scheme, reviewing weekly reports sent by the finance ministry.

“Prime Minister Narendra Modi is personally monitoring the (response to) the domestic black money scheme, with weekly reports being sent to the PMO,” said afinance ministry official. The department of revenue is sending progress reports on declarations received and outreach measures to popularise the Income Declaration Scheme-2016.

According to a finance ministry official, the declarations have indicated the scheme has seen a better response than the one for black money stashed abroad announced last year. The department, however, refused to divulge the number of declarations made so far. “This is the first month and many declarations have already come in, unlike in the case of foreign black money last year when most declarations came in during the last month. But that was also because the number was small as it dealt only with NRIs (non-resident Indians),” said the official. The new scheme gives domestic taxpayers a chance to declare undisclosed income or assets and avail immunity from higher penalty and prosecution by paying tax and other charges at 45 per cent. This includes a tax rate of 30 per cent, besides Krishi Kalyan Cess and penalty of 7.5 per cent. Modi had said in a radio address on Sunday: “It will be better that you take advantage of the window provided and save yourself from the difficulties that you can face after September 30.” As part of the outreach measures to popularise the scheme, state-run Air India’s boarding pass will also carry details of the scheme. It is looking at printing 500,000 boarding passes with details. In a related development, Finance Minister Arun Jaitley will meet industry associations, chartered accountants and other professionals on Tuesday to clear doubts about the window. Besides, the central board of direct taxes (CBDT) will release a second round of frequently asked questions on the scheme on Tuesday, addressing key concerns. “The second round ofFAQs will address queries related to the benefits of making disclosures under the scheme and the immunities that they will get and the fact that the declarations will remain confidential,” said another official. While those using the income declaration scheme will get immunity from prosecution under the Income Tax Act and Wealth Act, concerns persist over prosecution under indirect tax Acts. The department of revenue is of the view that no immunity could be extended from prosecution under service tax, excise or Customs Acts. “We will clarify that it will not be possible,” said the official. The CBDT had earlier released a set of FAQs to dispel doubts about the scheme. On the other concern related to the higher tax liability arising from the declared asset with respect to the appreciated asset value, creating cash flow concerns for declarants, the CBDT is of the view that that they could sell the asset and then pay 45 per cent tax. The scheme requires declaration of undisclosed asset at its fair market value (FMV) as on the date of commencement of the scheme, which is June 1, and will be regarded as cost of acquisition of the asset for any subsequent transfer. Assets acquired after 1981 would have to be assessed in terms of fair market value, though the government balanced it by extending the capital gains tax benefit when the asset is sold later. “It is a harsh Act. It is an opportunity for a person who has undeclared assets to come clean by paying 45 per cent tax. If you do not have cash flow to pay tax on appreciated asset, then liquidate the asset and generate cash flow,” an official said. In the previous Budget, the government had come out with a similar compliance window for people holding undisclosed assets abroad. Disclosures during that window were charged a total tax and penalty of 60 per cent. The exchequer received just Rs 2,428.4 crore in payments from disclosures worth Rs 4,147 crore made during a three-month compliance window that ended on September 30, 2015.–BS