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.
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.
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.
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.
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
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
