Govt group to look into black money amnesty

The government on Tuesday said it has set up a group to look into a possible amnesty scheme to bring into the mainstream of the economy black money stashed abroad. It also rebutted the charge that it is hiding behind the cover of tax treaties to not reveal the names of Indians with illicit funds in Liechtenstein.

Addressing a much-awaited press conference on the request of Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee said an amnesty scheme is a double-edged sword, as it could be criticised for penalising honest taxpayers, but would also enrich the exchequer. "A group has been formed to look into the matter," Mukherjee said.

The finance minister said the names of those with funds illegally parked in Liechtenstein would be unveiled once the income-tax department began prosecution. He said if the names were revealed at this stage, no country would ever provide information to India under the double taxation avoidance agreement (DTAA). “The problem is information, which we have obtained under some conditions of secrecy,” Mukherjee explained.

The finance minister outlined a five-pronged strategy adopted by the government to unearth black money. The strategy involves creating an appropriate legislative framework, joining the global crusade against unaccounted for wealth, setting up institutions to deal with illicit funds, developing a system for implementation, and imparting skills for effective action.

He said information from other countries can be obtained only under a legal framework, and as such India has already amended pacts with 23 countries to obtain data from their banks.

It has initiated negotiations with 65 countries to specifically allow for exchange of banking information and data on taxpayers not covered by DTAAs. The government is also setting up eight more income-tax overseas units, adding to the operational ones in Singapore and Mauritius.

On Thursday, the finance minister will also appear before a Parliamentary standing committee to provide details on the issue. The committee has asked for copies of some reports on black money. Mukherjee said the government has constituted a multidisciplinary committee to estimate the amount of illicit funds generated by Indian citizens. A recent study by Global Financial Integrity estimated the value of illicit outflows from India at $462 billion.

Last week, the Supreme Court had criticised the government on its handling of the black money issue and its reluctance to publically disclose the names of Indians who have parked money illegally in LGT Bank of Liechtenstein, which borders Switzerland.

The government had submitted the names of the account-holders to the Supreme Court, but said that it could not make them public due to a confidentiality clause in an agreement between India and Germany, which had furnished the information last year. The finance minister said he was not privy to the information.

The government has detected undisclosed income of about Rs 15,000 crore in the last 18 months and has collected additional taxes of Rs 34,601 crore during the period.

“The directorate of transfer pricing has detected mispricing of Rs 33,784 crore, which has prevented shifting of an equivalent amount of money outside India,” Mukherjee said, and added necessary provisions have been made in the Direct Taxes Code to check illicit outflows.

 

Also read: January 18: CBDT plans to lure black money stashed abroad