Tax amnesties in India : an empirical evaluation

A theoretical framework in a companion paper examines the role of amnesties in allowing taxpayers to launder assets accumulated by past tax evasion. Based on this theory, a dummy variable technique to study the impact of amnesties on revenue is developed and applied to Indian data. Only the 1975 amnesty appears to have had a positive effect on revenue, with other amnesties having negligible or even negative effects. These results support the hypothesis that adverse compliance effects of amnesties or falling penalty collection can overwhelm direct gains from an amnesty. (Author abstract)