Voluntary Compliance Scheme for Foreign Black Money: Success or Failure

Abstract

The Government of India offered a window of opportunity to those with unaccounted for income and wealth kept abroad to come clean and pay normal taxes in India. The scheme closed on 30th September 2015. There were over 638 declarants who offered a sum of Rs.4,147 crores for tax. The scheme offered no amnesty; both tax and penalty were payable. The saving grace was that there will be no prosecution and time was granted upto December 2015 for payment for the declared taxes. Expectations ran high in Government circles that there will be huge inflows under the scheme. It did not succeed. It was a failure. Why did it fail?