You are here: Home » Reuters » News
Business Standard

India launches new tax evasion amnesty scheme to unearth unaccounted cash

Reuters  |  NEW DELHI 

By Rajesh Kumar Singh

(Reuters) - Minister on Monday unveiled a scheme to give dodgers another chance to come clean, as he sought to bring billions of dollars worth of undeclared into the mainstream economy.

The move follows Prime Minister Narendra Modi's decision to scrap 500-rupee and 1,000-rupee banknotes in a bid to flush out earned through illegal activities, or earned legally but never disclosed.

Under the proposed scheme, a person making the declaration would have to pay 50 percent in taxes and surcharges. The individual would also have to park a quarter of the total sum in a non-interest bearing deposit for four years.

While Jaitley expects the scheme to discourage evaders from laundering their ill-gotten wealth, experts said there was no better alternative to sweeping reforms.

"Since it offers clarity on how unaccounted will be taxed, it can help in cleaning up the economy," said Vishal Malhotra, a partner at Ernst & Young.

"But you must follow it up with a drastic reduction in rates to improve compliance."

In the first week after India's so-called "demonestisation" drive, banks received $74.2 billion in fresh deposits. Analysts at HSBC expect the deposits to swell by $164 billion by end-December.

The surge in deposits, particularly in previously empty accounts, has alarmed authorities who fear poor account holders are being lured into laundering money on behalf of big-time evaders.

The new scheme comes barely a month after a similar drive managed to unearth $9.5 billion in undeclared and assets. But with estimated to make up just 6 percent of illicit wealth, the disclosures might not be of the same proportion.

Last year, an amnesty aimed at unearthing foreign assets fell short as fewer than 700 people availed of it, paying about $364 million in taxes.

Modi's administration has billed the "demonetisation" drive a "surgical strike" on black money, which has sucked out 86 percent of in circulation and pushed Asia's third-largest economy to the brink of a liquidity crisis.

Opposition parties led by Congress have stalled parliament, demanding a reply from and compensation for the families of dozens of people reported to have died while queuing at banks to swap old money for new.

On Monday, they took to the streets protesting against Modi's decision to cancel 500-rupee and 1,000-rupee banknotes as legal tender.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine and Clarence Fernandez)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

India launches new tax evasion amnesty scheme to unearth unaccounted cash

NEW DELHI (Reuters) - Finance Minister Arun Jaitley on Monday unveiled a scheme to give tax dodgers another chance to come clean, as he sought to bring billions of dollars worth of undeclared income into the mainstream economy.

By Rajesh Kumar Singh

(Reuters) - Minister on Monday unveiled a scheme to give dodgers another chance to come clean, as he sought to bring billions of dollars worth of undeclared into the mainstream economy.

The move follows Prime Minister Narendra Modi's decision to scrap 500-rupee and 1,000-rupee banknotes in a bid to flush out earned through illegal activities, or earned legally but never disclosed.

Under the proposed scheme, a person making the declaration would have to pay 50 percent in taxes and surcharges. The individual would also have to park a quarter of the total sum in a non-interest bearing deposit for four years.

While Jaitley expects the scheme to discourage evaders from laundering their ill-gotten wealth, experts said there was no better alternative to sweeping reforms.

"Since it offers clarity on how unaccounted will be taxed, it can help in cleaning up the economy," said Vishal Malhotra, a partner at Ernst & Young.

"But you must follow it up with a drastic reduction in rates to improve compliance."

In the first week after India's so-called "demonestisation" drive, banks received $74.2 billion in fresh deposits. Analysts at HSBC expect the deposits to swell by $164 billion by end-December.

The surge in deposits, particularly in previously empty accounts, has alarmed authorities who fear poor account holders are being lured into laundering money on behalf of big-time evaders.

The new scheme comes barely a month after a similar drive managed to unearth $9.5 billion in undeclared and assets. But with estimated to make up just 6 percent of illicit wealth, the disclosures might not be of the same proportion.

Last year, an amnesty aimed at unearthing foreign assets fell short as fewer than 700 people availed of it, paying about $364 million in taxes.

Modi's administration has billed the "demonetisation" drive a "surgical strike" on black money, which has sucked out 86 percent of in circulation and pushed Asia's third-largest economy to the brink of a liquidity crisis.

Opposition parties led by Congress have stalled parliament, demanding a reply from and compensation for the families of dozens of people reported to have died while queuing at banks to swap old money for new.

On Monday, they took to the streets protesting against Modi's decision to cancel 500-rupee and 1,000-rupee banknotes as legal tender.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine and Clarence Fernandez)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

India launches new tax evasion amnesty scheme to unearth unaccounted cash

By Rajesh Kumar Singh

(Reuters) - Minister on Monday unveiled a scheme to give dodgers another chance to come clean, as he sought to bring billions of dollars worth of undeclared into the mainstream economy.

The move follows Prime Minister Narendra Modi's decision to scrap 500-rupee and 1,000-rupee banknotes in a bid to flush out earned through illegal activities, or earned legally but never disclosed.

Under the proposed scheme, a person making the declaration would have to pay 50 percent in taxes and surcharges. The individual would also have to park a quarter of the total sum in a non-interest bearing deposit for four years.

While Jaitley expects the scheme to discourage evaders from laundering their ill-gotten wealth, experts said there was no better alternative to sweeping reforms.

"Since it offers clarity on how unaccounted will be taxed, it can help in cleaning up the economy," said Vishal Malhotra, a partner at Ernst & Young.

"But you must follow it up with a drastic reduction in rates to improve compliance."

In the first week after India's so-called "demonestisation" drive, banks received $74.2 billion in fresh deposits. Analysts at HSBC expect the deposits to swell by $164 billion by end-December.

The surge in deposits, particularly in previously empty accounts, has alarmed authorities who fear poor account holders are being lured into laundering money on behalf of big-time evaders.

The new scheme comes barely a month after a similar drive managed to unearth $9.5 billion in undeclared and assets. But with estimated to make up just 6 percent of illicit wealth, the disclosures might not be of the same proportion.

Last year, an amnesty aimed at unearthing foreign assets fell short as fewer than 700 people availed of it, paying about $364 million in taxes.

Modi's administration has billed the "demonetisation" drive a "surgical strike" on black money, which has sucked out 86 percent of in circulation and pushed Asia's third-largest economy to the brink of a liquidity crisis.

Opposition parties led by Congress have stalled parliament, demanding a reply from and compensation for the families of dozens of people reported to have died while queuing at banks to swap old money for new.

On Monday, they took to the streets protesting against Modi's decision to cancel 500-rupee and 1,000-rupee banknotes as legal tender.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine and Clarence Fernandez)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard