Not surprisingly, many of the 500 named in the Panama Papers investigation by The Indian Express in collaboration with International Consortium of Investigative Journalists (ICIJ) and Suddeutsche Zeitung claim their overseas accounts were declared to both RBI and the tax authorities. Real estate firm DLF, for instance, has said that not only were the remittances done under the RBI’s Liberalised Remittance Scheme (LRS) introduced in 2004, the details of the companies mentioned in the Mossack Fonseca (MF) papers—MF is the law firm involved in creating the companies in the Panama Papers—were even disclosed in the company’s annual report. It will take a detailed investigation by the tax authorities and the central bank—the FM has promised a special multi-agency group to monitor this—to clear the air on each individual/company since the MF papers clearly show many accounts were set up before RBI’s LRS. Apart from the fact that Indian tax officials have drawn a blank while trying to get information from MF on many occasions in the past, what is most important about the Panama Papers is that a global team of 400 reporters in 76 countries was able to achieve a lot more than governments have in terms of unearthing the secrets of tax havens.
Indeed, it is not just the Panama Papers, but the Liechtenstein list and the HSBC list that give the Indian tax authorities a lot of information to track illicit fund flows. In fact, ever since the US began cracking down on tax havens and forced Swiss banks to divulge details of US nationals with funds in these banks—and opened up the banks to threat of legal action—the flow of information to taxmen world over has increased manifold. And, based on the finance ministry’s statement, good progress has been made in tracking those named. While the ICIJ investigation in 2013 had revealed names of 700 Indians with connections to offshore entities, the taxman has identified 434 of them as Indian residents and 184 have admitted their relationship with the transactions. Of the 628 persons named in the HSBC lists, 569 have been traced and assessments have been made in 390 cases where over R5,000 crore of undisclosed income has been found and tax demands (including penalties) of R 5,800 crore have been raised. Critical as they are, the investigations don’t back the hysterical estimates of black money stashed abroad—as compared to the LK Advani-Global-Financial-Integrity estimates of $462bn (R 30 lakh crore), the Liechenstein and HSBC lists have resulted in catching just R7,000 crore of black money. Even so, just 637 people declaring R3,770 crore of income in the last overseas black money scheme is as odd as the absence of names of Indian politicians from the list, especially when you consider leaders in Moscow, Beijing, Pakistan and Egypt figure in it. What is important from the taxman’s point of view, however, is that with several initiatives like the FATF, more and more information will be available from tax havens as well.