Two Dubious Income Declarations Under IDS Came Close To Tripping Modi Government 

Two high-value declarations made under the Income Declaration Scheme (IDS) that closed on 30 September bear the hallmarks of conspiracy rather than genuine efforts to disclose hidden incomes. The Income Tax Department has saved itself and the government from huge embarrassment by keeping these two declarations pending and rejecting them recently.

According to a press note put out by the Finance Ministry yesterday (4 December), Mahesh Kumar Champaklal Shah of Ahmedabad declared an income of Rs 13,860 crore on the last day of the IDS deadline. Four members of a family in Mumbai, Abdul Razzaque Mohammed Sayed, Mohammed Aarif Abdul Razzaque Sayed (his son), Rukhsana Abdul Razzaque Sayed (his spouse) and Noorjahan Mohammed Sayed (sister of the primary declarant) made an even more astounding disclosure of concealed income of Rs 200,000 crore – an amount equal to 37 per cent of India’s fiscal deficit for 2016-17.

It is good that the taxman did not fall easily for it and decided to keep these declarations pending till they saw the colour of the tax payments due by 30 November. Consider the political damage if these amounts had been added up in the announcements made on 30 September, and the declarations were given out as Rs 279,000 crore instead of Rs 65,000 crore. It would have been a huge feather in the Narendra Modi government’s cap, only to destroy its credibility later.

That both the tax department and the government kept their cool after receiving these improbably high declarations serves as testimony to their innate caution.

The latest figures for declarations under the IDS show that 71,726 declarants made disclosures of hidden incomes of Rs 67,382 crore – for an average of less than a crore each. This suggests that most of those declaring hidden incomes must have been small traders, minor businessmen and professionals; none of the big fish chose to bite, barring the people Shah and the Razzaques could have been fronting for.

In the absence of real information on these two parties, one can only speculate about their motives in making such large disclosures when neither of them seemed to have the means to support such claims. Shah is not supposed to have paid even his milkman or his cable bills.

Two possibilities can be considered.

One, these parties could have been used by real moneyed people to check if disclosures of large amounts would arouse suspicion in the tax department or not. That it did show that the taxman did not get taken in.

Two, there could also have been a political conspiracy to see if the government goes about tom-tomming such large disclosures before being shown up as fake. If the Modi government had done that, it would have severely dented its credibility as a fighter against black money. TheWire.com, which has no love lost for Modi or his government, was quick to exult in the discovery of Shah’s declaration (read here).

The only thing that needs to be stated is that these declarants need to be protected and investigated to discover who put them up to make these declarations in the first place. The government did well to keep these declarations out of its claims.

It has probably avoided a trap laid for it to fall into.