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Bulk of black money within India: Jaitley

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New Delhi: Finance Minister Arun Jaitley has said that bulk of black money was still within the country and called for a change in the attitude of people so that plastic currency becomes the norm and transactions in cash an exception.

In an article ‘The NDA government’s campaign against black money’ posted on his Facebook page on Sunday, Jaitley said the government was at an advanced stage in considering the requirement of furnishing PAN (permanent account number) card details for cash transactions beyond a limit.

He said the NDA government’s strategy was to put more money in the pockets of middle and low income groups by raising exemption limits and incentivising savings which will encourage consumption and which, in turn, will increase volumes of indirect taxation.

The Bharatiya Janata Party leader said opening a large number of payment gateways, internet banking, payment banks and the emerging reality of e-commerce will prompt the use of banking transactions and plastic money significantly.

“The bulk of black money is still within India. We thus need a change in national attitude where plastic currency becomes the norm and cash an exception. Being seized of this problem, the government has been working with various authorities to incentivise this change,” Jaitley said.

He said those who had declared their undisclosed assets abroad in the compliance window offered by the government “can now sleep well” and those who have failed to file such a declaration will be subjected to penal provisions.

“They will be liable to pay 30 percent tax and a penalty of 90 percent, thus leading to confiscation of the assets plus more. This law will create a deterrent in future against the flight of capital from India,” he said.

He said the government has taken a series of steps for international cooperation in the matters of tax evasion.

Referring to Prime Minister Narendra Modi’s initiative at the G-20 meeting for international cooperation in tackling unlawful assets held by the residents of one country in foreign soil, Jaitley said it was intended to lift the veil of secrecy in banking transactions and in real time inform domestic taxation authorities about transactions of their citizens internationally.

He said the government has signed an understanding with the US under FATCA (Foreign Account Tax Compliance Act) wherein the US and India would disclose to each other any real time transaction in accounts with financial institutions by its citizens in foreign territories.

He said Switzerland had agreed to provide India proof relating to several HSBC accounts where India can give some evidence over and above the stolen data which was delivered to New Delhi through France.

“It is expected that over the next two years this international cooperation will be worked out. Thus those with illegal assets abroad, who have failed to make declarations, would now stand the risk of information relating to them eventually reaching the Indian taxation authorities,” Jaitley said.

The minister said that 638 people have declared their income amounting to Rs.3,770 crore under the 90-day compliance window offered by government to those wanting to disclose their unlawful assets abroad under the new law.

Jaitley said the government had also accelerated income tax assessments against people holding illegal money in Lichtenstein and in the HSBC bank at Geneva. Criminal prosecutions have been launched in cases where illegalities have been found.

He said a total peak balance of about Rs 6,500 crore has been assessed in these accounts.

“The assessed income of Rs 6,500 crore in HSBC and Rs 3,770 crore declared income during the compliance window should not be treated as income under any immunity scheme.

“The comparison of these amounts with amnesty schemes relating to domestic black money is ill conceived. The campaign against domestic black money has to be separately dealt with for which the government is independently taking steps,” Jaitley said.

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Is investing in Bitcoin safe? Get the basics first!

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India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall. Pixabay
India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall. Pixabay

With the fussy mania of Bitcoin going around and past, your eyes and ears, in the news and peer discussions, you must be having some basic questions about it: What is bitcoin? Is it legal? How can I get it? But most of all, you must be thinking, ‘Is investing in Bitcoin safe?’

Let’s find out!

Pluto Exchange has launched first app that will trade in bitcoins in India
Pluto Exchange has launched the first app that will trade in bitcoins in India. Wikimedia commons

ALSO READ: Bitcoin Worth Millions Stolen Days Before US Exchange Opens

Clearing the basics

  • Bitcoin is the first ever cryptocurrency that existed, it was invented in 2009 by Satoshi Nakamoto.
  • Cryptocurrencies are nothing but computer codes that have monetary value. No Government has any control over them.
  • Bitcoins ‘self-contain’ their value i.e. there’s no need for any bank to move or store the money.
  • Bitcoin currency is completely unregulated and decentralized.
  • Bitcoins are mined, and they can be mined by anyone in the general public who has a strong computer. However, only 21 billion of bitcoins in total can be mined. Currently, there are around 11 million in circulation.
  • Bitcoin has no underlying physical monetary base to support its value, and it is totally subject to its demand in the market.

What are the risks?

  • Low demand: India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently, the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall.
  • Unregulated: There is no bank or government tax agency that can track your money and its movement. Hence, it can become a tool for money laundering.
  • Irreversible transactions: There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever.
There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever. Pixabay
There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever. Pixabay

ALSO READ: How can you trade in Bitcoin in India?

Status of Bitcoin in India

Finance minister Arun Jaitley highlighted in a statement that cryptocurrencies are not legal tender and have no regulatory permission or protection in the country.

However, there was no announcement banning or imposing any curbs on the same. The government panel is also awaiting a report on tackling cryptocurrencies in India, Jaitley said.

The government has recently cautioned investors to be wary of virtual currencies like bitcoin, saying they are like Ponzi schemes with no legal tender and protection.

“One of the features of cryptocurrency is that there is lack of dependence on the state. It functions with a degree of anonymity. It operates within a virtual community which is created and enjoys the trust of that virtual community,” Finance Minister Arun Jaitley told the Rajya Sabha.

“The government is examining the matter. A Committee under the chairmanship of the Economic Affairs Department Secretary is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken… Instead of taking any knee-jerk action, let’s wait for the report of this committee.” Jaitley added