My superannuation

Dear Readers
I am approaching 60 years. On 30th Jan 2018 I will celebrate 60th birth day. On the very next day I will be retiring from the post of chief Manager from Bank of Baroda.
I could not spare much time for blogging in recent days due to engagements as required by my employer.
I will get enough time for blogs now.

(V P Mishra)

Black Money eradication measures,

To check black money menace, the government today announced 10-year imprisonment for hiding foreign assets, along with a host of other tough measures including dis incentivising of cash dealings in real estate and other transactions.

Besides framing new legislation, the government will also take steps to popularize use of credit and debit cards and putting a cap on cash transactions, while quoting PAN will be mandatory for all sales. 

When the measures regarding curbing of black money will be enacted, India will join the league of countries like Singapore, UK and the US, under which those hiding income and evading tax in relation to foreign assets can be slapped with a prison term of up to ten years.

In fact, the proposed imprisonment penalty, as also the monetary penalty, could be higher than many other countries in most of the cases. The new law would also provide for a penalty for such concealment of income and assets at the rate of 300 per cent of tax, while offenders will not be permitted to approach the Settlement Commission.

More over Non-filing of return or filing with inadequate disclosure of foreign assets will itself be liable for prosecution with punishment of rigorous imprisonment up to seven years.

Under the US laws, the federal penalties for each count of conviction of tax crimes include prison term of maximum one year and a fine of US dollar 100,000 for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents. Besides, the penalties include prison term of up to ten years and a fine of US dollar 100,000 for "conspiracy to defraud with respect to false refund claims". Other penalties include a maximum of three years in prison and a fine of US dollar 250,000 for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a US dollar 250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.

In the UK also, the 'top tax criminals' of the year 2012 -- a list of 32 individuals -- were given a total of over 150 years imprisonment. The UK's tax authorities have recently put in place tougher penalties for those who hide assets and income abroad, by doubling the maximum penalty for offshore tax evasion to 200 per cent of the tax dues.

Under the Singapore's Income Tax Act, any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized four times the amount of tax undercharged and may also be fined an amount not more than 50,000 Singapore dollars or jailed for up to 5 years, or both. Besides, Singapore's Goods and Services Act provides that any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized three times the amount of tax undercharged and may also be fined an amount of 10,000 Singapore dollars or jailed for up to 7 year

To check black money menace, the government today announced 10-year imprisonment for hiding foreign assets, along with a host of other tough measures including dis-incentivising of cash dealings in real estate and other transactions.

Besides framing new legislations, the government will also take steps to incentivise use of credit and debit cards and putting a cap on cash transactions, while quoting PAN will be mandatory for all sale  .. 
The Special Investigation Team (SIT) on black money has welcomed the announcements made in the Budget to tackle menace of illegal funds and similar assets stashed abroad even as it cautioned that good results in this direction would come only after new laws and measures are implemented in a proper manner.

Black money in india - an overview

Black money is unaccounted money for which tax has not been paid and has been generated through unethical sources.

There are no official estimates of India’s black economy, although various figures that vary so drastically are routinely bandied about to embarrass governments. According to a report titled Illicit Financial Flows from Developing Countries: 2002-2011 and released last December by Global Financial Integrity, the total black money outflow from India was about $344 bn during the period. GFI had included India among the top 10 developing countries with a black money outgo of Rs 87.2bn in 2010 alone. 
Assessing the black money is a difficult task for any agency to carry out since data are hard to come by. New theoretical advances are required to estimate this sum. The problem is there are 77 tax havens in the world, according to the Tax Justice Network. Switzerland is the best known and possibly the biggest but it is only one among many. There is no estimate of how much is held in Switzerland or in any of the other tax havens. Problems of definition, data collection, and procedures used in computation, are some of the issues that hinder a meaningful understanding of the extent of black money in the system. 

According to a report on black money by the Central Board of Direct Taxes, the main method for generation of black money is through commercial tax evasion by under-reporting revenues and inflating expenses adopted by a range of business entities. So the focus needs to be shifted towards how the generation of black money and its outflow from the country can be curtailed in the first place.

It is common knowledge that elections are fought with black money. Large amounts of currency notes were seized during the recent parliament elections, but little effort was made to follow the money trail and arrest the politicians involved. The Election Commission is either helpless or indifferent to the play of money power in elections. Debates about the state funding of election campaigns have remained inconclusive. Political parties resist attempts to either bring them under the RTI Act or monitor their funding. 
The Narendra Modi government has accumulated goodwill with its very first Cabinet decision to set up a special investigating team (SIT) on the question of black money. This issue has agitated political and public discourse since the late Sixties.

Opponents of the previous government have frequently accused them for permitting and providing tax evaders, an atmosphere in which the growth of tainted money can flourish. This is true that poor governance leads widespread tax evasion, and fosters a culture of getting round laws by paying bribes. Over  many decades, and the air of impunity is responsible both for the creation and circulation of unaccounted money.

However, it must be said that When the UPA-2 regime began to come under fire, and anyone could make bold to challenge the government to get the “country’s looted wealth” back, the Supreme Court responded positively to a writ petition by eminent lawyer Ram Jethmalani and others who sought a direction to the government to find ways for the return of the money from accounts held illegally abroad. It asked the government to set up an SIT. This was in 2011.
Politically, the UPA failed to read the mood, and instead of appointing an SIT, it made executive efforts to get details from the Swiss, the Germans and others. It also urged the apex court to amend its order to form an SIT. The top court refused the plea.

The new BJP government, took the matter smartly as the first item on its agenda and appointing the high-powered Justice M.B. Shah panel in keeping with the recent electoral campaign of the BJP when Modi said that the huge sums of money being parked in tax havens abroad would be brought back and used for the welfare of the poor if his party came to power. In 2009 too when BJP leader L K Advani had came out with a white paper on black money.the  Congress wasof the opinion that it was an imaginary data. But soon the party had to abandon its denial mode. The government told parliament through the President’s address that Govt. was fully committed to the issue of illegal money of Indian citizens outside in secret bank accounts they will vigorously pursue the same.” The next year, however, the government completely forgot about it. The previous Congress-led  UPA regime had been dragging its feet on implementing Black wealth has been an election issue for years.
Back in July 2011, the French government handed over a compact disc with details of 700 secret bank accounts held by Indians at HSBC Bank in Geneva. Yet for almost a year, the government staved off pressure from the opposition and civil society to act on the dossier until May 2012 when the then finance minister, Pranab Mukherjee, released a white paper on black money. While the paper highlighted the scale of the problem it still did not address the question of what exactly the dossier contained. Who were these 700 account holders? What were their holdings and how did they acquire that money? A finance ministry statement also insisted that relevant agencies were indeed probing the matter.

Now that the government has changed, will the broad results of the probe be made public without any further delay?

Establishing an SIT is one thing, bringing the tax evaders to justice and repatriating such money earned illegally is quite another. The task is arduous and SIT must be prepared for the long haul. Its chief Justice Shah himself has spoken about the complexities involved. How far it will succeed in its mission is, however, anybody’s guess.

 The Law Ministry today told a government panel on black money that imposing death penalty on economic offenders would be barbaric and take the nation backward.

The opinion was communicated to CBDT Chairman M C Joshi-headed panel on black money which discussed the need for strengthening the administrative mechanism to deal with the menace.

The committee, according to a Finance Ministry official, was against any amnesty scheme for tax evaders and “is not likely to recommend Voluntary Disclosure of Income Scheme (VDIS) for assessees, domestic or overseas”.  As regards harsher punishment for economic offenders, the Law Ministry representative told the Committee that it was not possible to award death penalty or life imprisonment to them.

“It (death penalty) is barbaric. Such provisions will take the country centuries back,” the official said.  Death penalty is awarded in the rarest of rare cases by Indian courts.

“No need for new laws. Existing laws are adequate to deal with economic offences. We only need to strengthen administrative machinery and deploy more manpower and resources,” said an official after the meeting.  It, however, is of the view that taxmen should be given powers to look into income tax returns even beyond six assessment years.

Constituted in May, the panel was asked to suggest legal framework for confiscating illegal wealth and measures to bring back black money stashed abroad.

The committee on black money has been asked to examine, among other things, imposing an “exemplary punishment” on perpetrators of illegal funds.

After the committee meeting, the Finance Ministry official said laws are being reviewed on a continuous process.  Giving an example, he said the proposed Direct Tax Code (DTC) is a modern and competent direct tax law.

The existing laws like the Income Tax Act and the Prevention of Money Laundering Act have provisions for tough punishments for economic offences, he said.

While the committee is not in favour of enacting any new law, it may suggest to the government that the real estate business should be regulated.

The need of the hour, the panel opined, was proper implementation of laws and a better information sharing system between the various agencies of the government..

It is likely to submit its recommendation by November. 

During the meeting, public feedback on the issue also came up for discussions. 

Some of the major suggestions include state funding of elections, compulsory scrutiny of returns of politicians, sale of public licenses only through auction and passing of public delivery act.

With an aim to deal with the menace of black money, India has adopted a five-pronged strategy, including negotiation and re-negotiation of tax treaties with different countries