Nine measures taken by government to curb black money
The government is hell-bent on cracking down on black money and undisclosed income of Indians within the country and safely stowed away abroad. While there is no proper estimation of the actual amount of black money in the economy, the government is actively taking measures to stop it.
Recent media reports quoted Zurich-based Swiss National Bank saying that money held by Indians in Swiss banks had dropped by nearly one-third.
According to Minister of State for Finance Santosh Kumar Gangwar, a sectoral analysis of the admission of undisclosed income during searches conducted by the Income Tax Department in FY16, revealed that the main sectors that is generating black money are — manufacturing (31%), real estate (29%), trading (8%), educational institutions (7%), contractors (6%), services (5%), gems & jewellery (4%). Gangwar was responding to a question asked in the Rajya Sabha.
The government has announced several measures since it took office in New Delhi, to clamp down on black money, both, within the country and outside it.
These involve policy-level initiatives, more effective enforcement action on the ground; putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building, and integration of information and its mining through appropriate use of information technology.
Here are some of the major initiatives taken by the government:
1) The Union Cabinet on May 2014, approved the constitution of a Special Investigating Team (SIT) to implement the decision of the Honourable Supreme Court on large amounts of money stashed abroad by evading taxes or generated through unlawful activities.
2) The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015â€™ came into force on July 1, 2015, to specifically and more effectively deal with undisclosed income.
3) For the investigation of Panama Paper leaks, the government brought in Constitution of Multi-Agency Group (MAG) with officers of the Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU).
4) India has been collaborating with foreign governments to facilitate and expand the exchange of information. For this, the Double Taxation Avoidance Agreements (DTAAs). has been signed with tax havens like Mauritius and Cyprus.
5) Global efforts to combat tax evasion and black money were taken by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having an information sharing arrangement with the US under its Foreign Account Tax Compliance Act (FATCA).
6) The government is also trying to automate information exchange with several countries, including Switzerland, to clamp down on black money. For this, so far, both India and Switzerland have agreed to speed up work on the Automatic Exchange Of Information (AEOI) and make it possible by 2018.
7) The Lok Sabha on July 20, passed the Benami Transaction Bill 2015 which was predominately an anti-black money measure with the purpose to seize unknown property and prosecute those indulging in such activities, according to a PTI report.
8) An information technology based â€˜Project Insightâ€™ was introduced by the Income Tax Department to strengthen the non-intrusive information-driven approach for improving tax compliance and effective utilization of available information.
9) The Income Declaration Scheme, 2016 was announced recently, which is like a one-time amnesty-like compliance window for citizens to declare their undisclosed income. Under the scheme, persons can declare their undisclosed income and pay tax, surcharge and penalty amounting to 45% of the total undisclosed income. Here, the income declared will be taxed at 30% plus a ‘Krishi Kalyan Cess’ of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, amounting to 45% of the income declared under the scheme, a DNA report said.
The information about the various initiatives undertaken by the government was presented in a written reply to question no 2288 to the Lok Sabha by Santosh Kumar Gangwar.