Finance Minister Pranab Mukherjee on Tuesday said the newly-approved Directorate of Criminal Investigation (DCI) will strengthen the ongoing efforts of the income tax department in dealing with issues of black money as it will not only follow the illicit trail but also bring criminals to justice.
The government has approved of setting up of DCI this month to bring more focus into the activity of tracing black money. In the last two years, the department has unearthed black money worth R30,000 crore.
Speaking at the income tax annual conference, Mukherjee also exuded confidence that modified tax avoidance agreements with various countries and pacts with tax havens will help in dealing with the menace of black money.
He said the government was amending Double Taxation Avoidance Agreements (DTAA) by inserting a clause on information regarding banking sector and also entering into tax information exchange agreements (TIEA) with several countries, including tax havens such as Isle of Man, Cayman Insland, Bermuda, Virgin Insland.
DTAAs have been amended (clause on banking sector has been inserted) with 40 nations and TIEA has been sealed with few tax havens.
In the absence of a clause on banking sector in DTAAs, the contracting countries were not sharing information in this regard. However, after the G20 Summit in Pittsburgh and subsequent meetings of finance ministers of the member countries, all the 20 countries agreed to amend DTAAs.
Mukherjee also said that the strengthening of the transfer pricing mechanism has helped the government in preventing outflow of R33,000 crore. Black money stashed abroad, including Switzerland, has become a big political issue in the country, with the opposition accusing the government of not doing enough to bring back the illegal money. India is also renegotiating tax treaty with Switzerland.
He said the whole world is facing the threat of terrorism and so the funding of terrorism and its sources are of paramount interest. He added that the anti-national activities are funded through illegal sources of income and therefore the identification, detection and movement of this money is essential to keep a tab on the anti-national and illegal activities.
Speaking about the Central Processing Centre Bengaluru which has become fully functional, he said CPC Bengaluru has processed more than 85 lakh e-returns during the last fiscal and three more CPCs for tax returns are planned at Manesar, Pune and Kolkata.
He, however, said that litigation with the tax-payers still remains a matter of concern. Pursuant to recommendations of the Standing Committee on litigation in CBDT, monetary limits for filing the appeals have been revised upwards, which will have an impact on reducing the future litigation by almost 20-25%.
Commenting on the IMF’s chief post, which felt vacant following the exit of Dominique Strauss-Kahn, Mukherjee said he was in touch with his counterparts from developed and emerging economies on the issue and was keeping a close watch on the developments. Kahn is being tried for charges of sexual assault.
Several leaders from European countries have extended their support to Christine Lagarde, finance minister, France. Besides Lagarde, Planning Commission deputy chairman Montek Singh Ahluwalia and former British Prime Minister Gordon Brown figure in the list of probables for the top IMF job. When asked about the possibility of new chief from a developing country, Mukherjee said, “there are set procedures. We did not face this type of problem earlier. Normally, we decide through the process of consensus building.?
Lower indirect taxes on fuel to impact mop-up, says Mitra
Casting apprehension that inflation could be a spoilsport for India’s growth story, the finance ministry has cautioned that slashing of customs and excise duties for sharing burden of the common man from the high crude prices will significantly impact the revenue collection target in the current fiscal. Revenue secretary Sunil Mitra, speaking at the annual conference of chief commissioners and directors general of income tax, said, ?Any rollback of customs duty on crude oil or of excise duty on petroleum products on account of rising crude prices or on account of deregulation of diesel prices will significantly impact our indirect tax collection as well.?
Finance minister Pranab Mukherjee endorsed the views of the revenue secretary and said the current situation was not conducive for duty revision. Crude oil attracts a 5% customs duty and a R50 per tonne national calamity contingency duty (NCCD).