Government outlines measures to tackle black money

August 10th, 2012 - 9:56 pm ICT by IANS  

New Delhi, Aug 10 (IANS) The government Friday released details of its initiatives for unearthing and curbing black money, even as yoga guru Baba Ramdev’s fast to demand the government bring back illegal wealth stashed abroad entered the second day.

As part of its efforts, the Indian government has a “huge network of amended” Double Taxation Avoidance Agreements with 84 countries and Tax Information Exchange Agreement (TIEA) with nine tax havens

The government has obtained “more than 12,500 pieces of information regarding details of asset and payments received by Indian citizen in several countries which are now under different stages of processing and investigation,” a statement said Friday.

The authorities have also received “30,765 pieces of domestic information about suspicious transactions by the Financial Intelligence Unit which are under investigation”.

“The Directorate of Transfer Pricing has detected mispricing of Rs.67,768 crore in last financial year and in the current financial year (Rs 43,531 crore in F.Y. 2011-12). This has prevented shifting of equivalent profit out of the country.

“Directorate of International Taxation has collected taxes of Rs. 48,951 crore from cross broader transactions in last two financial years.

“Investigation wing of Central Board of Direct Taxes (CBDT) has detected concealed income of Rs.19,938 crore in last two financial years. Focused searches have been conducted in a number of cases in the current year on the basis of information received from foreign jurisdictions under the provisions of Double Taxation Avoidance Agreements”, it said.

As part of the DTAA with France, India has received information regarding Indians having bank accounts. “In 219 cases, the department has detected undisclosed income totalling Rs 565 crore and taxes amounting to Rs 181 crore has already been realized so far.”

As part of amendments made through the Finance Act, 2012 to deal with the menace of black money, and to deter the generation and use of unaccounted money, the General Anti Avoidance Rules to counter Aggressive Tax Avoidance Schemes was introduced, as well as the compulsory reporting of assets held abroad.

The amendment has also resulted in “Increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value; taxation of unexplained money, credits, investments, expenditures etc., at the highest rate of 30 per cent irrespective of the slab of income.

Another initiative was “Introduction of a reporting mechanism for assets and bank accounts in a foreign country,” the statement said.

The government has also commissioned a study on unaccounted income which is being conducted by National Council of Applied Economic Research (NCAER), National Institute of Public Finance & Policy (NIPFP) and National Institute of Financial Management (NIFM), with inputs from various ministries/departments. The study will be completed by the end of 2012.

In order to strengthen the existing laws, the government set up a panel under the Chairman, CBDT to examine the measures to strengthen the existing legal and administrative framework to deal with the menace of generation of black money. The measures include, declaring wealth generated illegally as a national asset, enacting / amending laws to confiscate and recover such assets; and providing for exemplary punishment against its perpetrators.

The panel submitted its report to the government on March 29, 2012. The report has been sent to different Ministries / Organisations and state governments for necessary action, the statement said.

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