Are revelations under Panama Papers turning out to be a damp squib?

Government officials say 90% accounts are legal and have been declared, while tax notices are sent to 50 people who have not declared anything at all

A Mossack Fonseca law firm logo is pictured in Panama City April 3, 2016. Photo: Reuters/Carlos Jasso
A Mossack Fonseca law firm logo is pictured in Panama City April 3, 2016. Photo: Reuters/Carlos Jasso

Even as two Prime Ministers are facing ire due to the Panama Papers, its effect on India could be limited as over 90% Indians said to have used the legal route of liberalised remittance scheme (LRS), The Economic Times reported on Wednesday."About 90% of these accounts have used RBI's LRS, but the rest should be prepared to face the music," a government official told the newspaper. 

Data for the decade to FY15 shows that more than $8 billion was transferred trough this route and a substantial part of it was for tuition fees and maintenance of close relatives, the publication reported. Meanwhile for the financial year 2015, $250 million was used for purchasing property and investment in shares and debt from the $1.3 billion transferred out of the country. 

The statement from the official quoted above also signals the crackdown of the government on people who have not used the amnesty scheme for revealing black money. 

Units of the Income Tax (Investigation) have, so far, sent a two-part questionnaire to around 50 people (or the rest 10% mentioned earlier) — from the 500 Indians named in the list — in different cities across the country, The Indian Express reported. The first part is a clarification whether they were actually the people named in the list; they have been given three days to respond. The second part seeks replies on permissions, details of shareholders or beneficiaries, deposits made under LRS, among others. They have been given 20 days to respond for this. 

Meanwhile, the I-T unit had made an assessment from its existing database and divided the names into three categories —people who had completely disclosed offshore assets, those who had partially disclosed and the ones who had not disclosed their firms at all. The first set of notices is likely to have been sent to people in the third category, the report added.

After the revelations in the Panama Papers, the government decided to set up a multi-agency probe consisting of sleuths from RBI.  The team also includes members from the Central Board of Direct Taxes (CBDT) and the Financial Intelligence Unit, the report in The Economic Times said.