Tuesday March 19, 2019
Home Uncategorized Bulk of black...

Bulk of black money within India: Jaitley


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.

Next Story

Political Climate Accused Of Encouraging The Promotion Of Black Money

There is a third reason why people who are tracking black money should not be looking at Swiss Banks

Political Climate Accused Of Encouraging The Promotion Of Black Money. Pixabay

Last week, the political climate was charged with accusations that the government had actually begun encouraging the promotion of black money. Prima facie, the charges seemed to have some merit in them. Swiss bank deposits from India had swelled by 50%, one of the largest increases in recent times. But the accusation was a bit uncharitable. For three specific reasons.

First, even though the percentages seem high, the total amounts involved in Indian deposits with Swiss banks are not. At CHF 1.02 billion – even after accounting for the 50% jump – the amount is significantly lower than the CHF 6.46 billion in 2006 when the UPA was in power. In fact, Indian deposits with Swiss banks had been declining for the past three years – right from 2014 when Prime Minister Modi formed his government. It was only last year that the trend was broken and Swiss deposits began climbing again.

The second reason was that Indian deposits with Swiss banks account for just 0.07% of global deposits with Swiss Banks. That is one of the lowest levels ever during the last decade, overshadowed by an even lower share of 0.05% in 2017. At such percentages, India’s deposits with Swiss Banks are not much to rant and rail about.

There is a third reason why people who are tracking black money should not be looking at Swiss Banks. True, they were the best shelter for clandestine money in the past. But Switzerland has entered into several bilateral treaties for making disclosures about bank deposits to requesting states. That includes a treaty with India to provide real-time information with regard to Indians from January 2019. Obviously, any Indian who wants to stash away black money will not do so with Swiss Banks, because he would stand exposed.

There could, thus, be one credible explanation for the quantum of deposits in Swiss Banks going up. It could be found in the government’s decision to ram through amendments to the Foreign Corrupt Practices Act (FCRA) in March this year.

which seeks to exempt political parties from disclosing their source of funds from overseas. The courts had earlier demanded that political parties make these disclosures and the government thought it wiser to try and change the law instead. This move is now being challenged before the Supreme Court as being unconstitutional by public spirited persons like EAS Sarma. The decision of the court is still awaited. The amendment to the FCRA technically permits politically connected parties to put their money back with Swiss  Banks where it is safer than in tax havens with not-so-unblemished a banking record. If this explanation is correct, one could say that the government, in collusion with all other political parties (all have kept quiet about these amendments), are responsible for the spurt in Swiss deposits.

cartoon showing black money
Cartoon Showing Black money. Flickr

As mentioned in these columns earlier, if people want to look for black money, they should first demand a full fledged investigation into the agriculture income disclosures before the tax authorities during 2011 and 2012. What makes those disclosures horrifying is (a) they were larger than ever before; (b) the cumulative value of disclosures during the two years was a mind-boggling Rs 874 lakh crore (Rs 874 trillion); (c) the cumulative value  of disclosures was eight times India’s GVA for 2013, and almost 100 times the total tax collected in that year.

It can be found in the decision of the enforcement authorities of not auctioning off properties they have seized in the past – irrespective of whether they relate to the NSEL Scam or the politicians who are being investigated for corruption (on extremely narrow charges). Attachment of properties makes for big news, full of sound and fury. But the refusal to auction them off points to collusion.

It can be found in the files of scores of senior officials who were suspended, when fraud was discovered, and then reinstated when public memory died. It can also be found in the files that routinely get burnt in fires that take place at government offices – possibly aimed at making evidence disappear – especially when it comes to corrupt deals and land development scams.

Also read: Punjab’s Aam Aadmi Party and Its Political Self Goals

But these are things politicians do not like to talk about. Many of them are collusive partners in the generation of black money. Their silence in permitting the amendments to the FCRA is ample proof of their willingness to allow a cover-up. The rantings and ravings against Swiss Banks are, therefore, of no consequence. (IANS)