Voluntary Disclosure of Income Scheme

The Voluntary Disclosure of Income Scheme (VDIS) was a very unconventional but successful step among Indian economic policies. It would give an opportunity to the income tax or wealth tax defaulters to disclose their undisclosed income at the prevailing tax rates. This scheme would also ensure that the laws relating to economic offences would not be applicable for those defaulters. Over 350,000 people disclosed their income and assets under this scheme, which brought a revenue of ₹78 billion (US$1.1 billion) to the Indian finance ministry. The scheme was closed on 31 December 1997.

VDIS succeeded more than the Indian finance ministry expected. Over 350,000 individuals, and a few companies and firms, disclosed their undisclosed incomes. The sequestered assets' worth was over INR 260 billion. With tax levied at 30 per cent of the disclosed asset, the inflow of around INR 78 billion to the treasury was a good one-fifth of what the government had collected in direct taxes in the past financial year. Seeing this success, then Union Finance Minister, P. Chidambaramcommented, "It is my faith that, given a chance, the people of India come clean." He claimed that his team of income tax officials had caused INR 330 billion to turn white.