India needs to do more on black money issue: Citi

Global financial firm Citi today said India needs to take more measures to stop illicit funds' flow to tax havens even as the government's recent steps have yielded some results.

"While government efforts are showing some results... more needs to be done to address the annual loss of assets overseas via illicit flows," Citi said in a report.

During the last 18 months the government has detected undisclosed income over Rs 15,000 crore, the Directorate of International Taxation has collected taxes of Rs 34,600 crore and the Directorate of transfer pricing has detected mis-pricing of Rs 33,800 crore.

Besides, the Indian government earlier this month adopted a 5-fold strategy that seeks a more proactive role for itself in the global crusade against illicit funds and creating an appropriate legislative framework including setting up overseas tax units.

A recent study by Global Financial Integrity (GFI) estimates the present value of total illicit flows at $462 billion, while a BJP Taskforce report in 2009 had put it anywhere between $0.5 and 1.4 trillion. Besides, GFI indicates that India losses funds at the rate of $19 billion each year.

"Curbing tax evasion and efforts to bring back illicit flows overseas would positively impact both the public finances as well as the Balance of Payments-via the remittance route," it added.

India at present has Double Taxation Avoidance Agreement with 79 countries and is working towards modifying the articles concerning exchange of banking information.

In the recent past, India has implemented preventative measures for money laundering, terrorist financing, and financial activities in line with FATF standards, it added.