Curbing Black Money - Steps by Government

Curbing Black Money - Steps by Government

Question : The Government of India has recently commissioned a study to provide an official estimate of black money. Discuss some of the steps taken by the government to curb black money.

Government has taken the following measures to curb black money apart from allocating a study to find estimates of the same:

• Introduction of comprehensive law in the current Budget Session 2015 to deal with black money stashed abroad namely The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015

• This provides for:

- Strict penalties equivalent to 3 years the amount of tax payable
- Stringent Prosecution through rigorous imprisonment up to 10 years with fine

• Constitution of SIT or Special Investigation Team in May 2014 under the chairmanship and vice chairmanship of former judges of the SC dealing with issues linked to black money

• Non-intrusive methods such as due emphasis on enforcement measures in high impact cases are also included

• Aim is to provide credible deterrence against tax evasion

• Strengthening and streamlining of the information collection and enforcement mechanism through use of IT, capacity building and so on

• Partnering international efforts to battle cross border tax evasion and tax fraud

• Promoting international tax compliance including implementation of uniform global standard on Automatic Exchange of Information on completely reciprocal basis leading to exchange of information regarding persons stashing money in:

- Offshore financial centres
- Tax Havens

• Renegotiating Double Taxation Avoidance Agreements with other nations to create Article on Exchange of Information to International Standards

• Expansion of India’s treaty network through signing of DTAAs and Tax Information Exchange Agreements/IIEAs with multiple tax jurisdictions for information exchange and transparency
• Interacting with foreign governments for information exchange under DTAAs/TIEAs/Multilateral Convention

• Exploration of non governmental sources to gain information pertaining to undisclosed foreign assets

• Utilising information from treaty partners to battle tax evasion and avoidance

Facts and Stats

• Government has commissioned a study in estimation of unaccounted income and wealth in the country and outside as well

• Study is to be conducted by National Institute of Public Finance and Policy/NIPFP, National Council of Applied Economic Research/NCAER

• Study’s focus: “To identify important sectors of economy in which unaccounted money is generated and examine causes and conditions that result in generation of unaccounted money”.

• Sectoral analysis of searches conducted by Income Tax department in past 3 fiscals show main sectors are:

- Real estate
- Trade and manufacturing
- Contractors
- Gems and jewellery
- Services