Tuesday, January 26, 2021
Home Politics India has shared protocol to tackle black money abroad: Minister

India has shared protocol to tackle black money abroad: Minister



Addis Ababa: Following agreements with countries on automatic exchange of tax information, signing of the Foreign Account Tax Compliance Act (FATCA) with the US and working with the Organisation for Economic Cooperation and Development (OECD), India has established some shared protocols in tackling black money stashed abroad, union minister Jayant Sinha has said.

“We made it clear that if the tax-payers have stashed assets or income offshore which they have not paid taxes on, there is no place to hide any more as far as India is concerned,” the Indian minister of state for finance, leader of his country’s delegation to the UN-sponsored Third International Conference on Financing for Development here, told IANS.

Referring to the new Indian law that taxes foreign asset or income and penalizes non-disclosure if undeclared by the end-September deadline, the minister said: “If the tax-payers do not disclose their assets by then, the government can take a 120 per cent of that as a penalty payment and they are going to be subjected to rigorous imprisonment.”

“And in addition to that, if indeed they disappear and leave the country, we can attach their domestic assets in lieu of the payment deficiency,” he said.

“Our dilemma is that tax to GDP ratio in India is about 10 per cent, whereas the OECD is close to 34.6 per cent central tax to GDP. In India, the highest was 12.4 per cent, which is coming down now to 10 percent,” Sinha said.

“This is a serious problem and we have to collectively work together — both developed and developing countries — to really be able to increase our tax collections, otherwise we cannot do the job that people have elected us to do which is to provide them the necessary public services,” he added.

Earlier this month, India and the US signed an inter-governmental agreement to implement the FATCA towards greater transparency between the two countries on tax matters.

As per this agreement under a new US law, Indian financial institutions would have to reveal information about US taxpayers to the revenue department which would be passed on to the US tax authorities. In turn, the US will also share financial information with India.

The Black Money Act, for the first time, allows levy of tax in India on assets kept abroad.

Unlawful, undisclosed income abroad has been taxed under this law at the rate of 30 percent with an additional 30 percent penalty.

The law provides for a compliance window for declaring and paying penalty. Failure to meet the compliance timeline will attract an additional penalty of 90 percent for a total tax liability of 120 percent on the quantum of black money stashed abroad.

According to a 2014 report by the Global Financial Integrity, India — with $95 billion — is among the top three countries in black money outflows after China ($250 billion) and Russia ($123 billion).

The report also states that the cause of black money and illicit financial flow from India lies in a “complex web structure and governance issues”.

An unofficial estimate of India’s illegal money stashed overseas puts it somewhere between $466 billion and $1.4 trillion.

Speaking earlier to the media, Sinha said a consensus has been reached on the so-called “Addis Ababa Action Agenda”.

“We have managed to forge global consensus on some very crucial issues related to the need for balanced development, and also managed to ensure a commitment of 0.7 percent of GDP from developed nations towards official development assistance (ODA), so the overall outcome has been quite successful,” he said.

“ODA globally is $135 billion, whereas various estimates by the UN and other bodies estimate tax revenue lost to poor countries at over $300 billion annually, so the importance of tax revenues far exceeds the potential of ODA to tackle development,” Sinha said.

“The tax-to-GDP ratio in developed economies is 25-35 percent, while it is only 10-20 percent in poor countries,” he added.

The Addis Ababa Action Agenda has more than 100 concrete measures addressing a range of issues including technology, science, innovation, trade and capacity-building.




Most Popular

Green Tax To Be Levied On Polluting Vehicles: Transport Ministry

The Union Minister for Road Transport and Highways Nitin Gadkari on Monday said his department has approved a proposal to levy "Green Tax" on...

38% Indian Women Techies Prefer WHF

Almost 38 per cent Indian women working in a tech or IT industry prefer working at home to working in the office, says a...

Telangana Boy Develops Smart Wristband Aiding Alzheimer’s

A 13-year-old boy from Telangana, who developed a smart wristband to monitor Alzheimer's patients, is one of the recipients of Pradhan Mantri Rashtriya Bal...

Diwali 2022 Opens Doors To An Extended Temple In Dubai

A new Hindu temple in Dubai, the foundation stone of which was laid last August amidst the pandemic, will open its doors to worshippers...

Changing Mood In Ayodhya Chronicled In New Book

Fear, apprehension and suspicion has finally been replaced with a sense of ease and excitement and Ayodhya, after the Supreme Court verdict - is...

Scientists Ask For Strict Measures To Restrict New Covid-19 Strain

With new Covid-19 strains reported from several parts of the world giving fresh threats to the fight against the pandemic, a group of scientists...

Pandemic: An Eye-Opener For Health Sector

The Covid-19 pandemic should serve as an eye-opener for the government to increase allocation for the health sector in the Union Budget 2020-21, feel...

Tri-colour, The Colour Code For Republic Day

Republic day is around the corner and so is the end of winter fashion. So why not end it in style? Here are some...

Recent Comments