FICCI lists reform steps to curb black money menace

To curb the menace of black money, industry body Ficci today suggested incentivisation of transactions through banking channels and a suitable framework for taxation of agricultural income.
Besides, it suggested reforms in the real estate sector and creation of IT infrastructure to track tax evasion.
Ficci has come up with an analysis in the form of a paper titled 'Widening of tax base and tackling black money'.
The document, which was submitted to the Revenue Secretary, has recommended that "government may provide some incentives so that dealers (particularly of high valued items like jewellery) are encouraged to accept payments through credit card / debit card and other banking instruments".

These incentives could take the form of an additional deduction from income relatable to the transaction value for calculating the tax liability or a reduced VAT, it said.
"State governments be encouraged to usher suitable mechanism (while providing reasonably high level of thresholds to avoid small farmers being burdened) for increasing the scope and quantum of agricultural income tax," it added.

On reforms in the real estate sector, it has asked government that taxes and charges at the time of registration can be split into two parts - a fixed component and a variable component.
"Irrespective of the reported value of the property a fixed component be paid to civic authorities, while the variable component may be dependent on the current market prices of the property," it added.

The paper said that the market price of a property may be determined by an independent government approved agency and that price should form the basis for calculating the taxes and charges to be paid by the buyer.
Further, it has suggested deploying and using robust IT infrastructure to consolidate and exchange information pertaining to different streams of taxes by using common means such as PAN of an assessee.
"This will facilitate in tracking cases pertaining to tax evasion resulting in accumulation of black money," it said.
It has also suggested that the provisions of the Income Tax Act, 1961 be amended to expand the scope of TDS and TCS by including uncovered sectors where black money gets generated.

Further, the papaer said that the government should simplify the tax structure and possibly reduce tax rates.
"This would deter tax evasion by leading to reporting of full transaction value. The step would be instrumental to discourage black money generation," it added.
A report by NIPFP in December 2012, estimated black money at above Rs 10 lakh crore or 10 per cent of the GDP. An earlier report in 1984 had estimated black money generated in the country to 19 per cent to 21 per cent of GDP or Rs 36,000 crore.