Since black money is a big evil, it is of utmost urgency that we get rid of it, and make the economy function in a healthy manner. In this regard, certain measures have already been adopted by the government.
Special Schemes:
The government at various times adopted special schemes to eliminate black money. The schemes have been of various types. One such scheme was the Voluntary Disclosure Scheme, This was adopted long back in 1951, and then twice in 1965 and again in 1975. Under these schemes, those declaring their income were not to be punished. Some success was achieved.
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A scheme introduced in 1991-92 Budget envisaged that the people with unaccounted money, if deposit the same with the National Housing Bank, will be given complete immunity from enquiry and investigation. The government would deduct 40 per cent of such deposits with the rest belonging to the depositors.
Another scheme, the latest one, is like the earlier ones (of 1951, 1965 and 1975) of voluntary disclosure of income introduced in 1997. Such people were to pay the tax and keep the declared income with them. The government realized over Rs. 10,000 crore as taxes.
Tax Efforts:
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The second set of measures relates to tax efforts. One bears upon the tax rates. The underlying approach is that, a reduction in tax rates will dampen the urge for concealing income to evade taxes. Second, concerns the efforts at raising tax revenues through administrative measures.
These consist of simplification of tax laws and tax procedures and more importantly the procedure of tax raids. These measures too have yielded some results. The government has also sought to curb growth of black money through measures like making it mandatory for property registrars, banks, RBI, mutual funds, companies issuing shares and debenture to report high-value transactions.
Cash withdrawal tax introduced in 2005-06 is also another measure to curb black money. Integration of state level VAT into a country wide goods and services tax would also facilitate the process of bringing all economic activities within tax information network’s reach.