Amnesty to tax evaders worries Transparency International

With the government considering a plan to offer an amnesty scheme for voluntary disclosure of undisclosed bank accounts and assets held abroad, corruption watchdog Transparency International (TI) has expressed concerns about the amnesty to tax evaders.

“Implicit in the proposal is acceptance that business corporate houses and individual businessmen have maintained secret bank accounts in foreign countries both by evading taxes and concealing the source of money, which could involve criminal and terrorist activities,” said P S Bawa, chair of Transparency International India.

The watchdog said the earlier amnesty schemes were premised on the ground that business houses and individuals would learn a lesson, declare income, and pay taxes in future. But, it added, that this has apparently not happened and the hopes of the government have been belied. TI also believed that the present move confirmed the inappropriateness of such schemes that pardoned not only illegal activities and concealment of sources of income, but also evasion of taxes, all of which are punishable under the common and taxation laws.

The body said the scheme encouraged tax evaders to continue such practice in the future. “Condoning such opaque activities that are against all norms of transparency, projects the image of the India as a reluctant, soft, and pliable State,” said the press release. TI reiterated that this would be a violation of the basic tenets of the Constitution that provides for rule of law and not executive orders that appear to be arbitrary and in violation of the fundamental right of equality before law.

“We urge the government not to get into the trap of increasing circulation of money in economy. There has been no dearth of funds as various schemes of the Government of India suggest,” said Bawa. TI strongly advocated the release of names of law breakers whose illegal activities need to be taken to a logical conclusion, so that, not only the source of income is unearthed, but they are suitably penalised under the tax laws and not pampered by paying a ‘levy’.

According to media reports, the scheme will be similar to the various Voluntary Disclosure Information Schemes (VDIS) offered for undisclosed incomes/assets held in India. But the authorities may not ask for disclosure of the money’s source. It was also reported by newspapers that the finance ministry had categorically ruled out such an amnesty scheme in its reply to Parliament earlier this year, but has begun to deliberate it after India Inc made a pitch for channelising undisclosed funds lying overseas for infrastructure development in its interaction with Finance Minister Pranab Mukherjee on August 1.