The government has announced a campaign against the black money stashed in safe havens abroad and constituted an investigation team headed by two retired judges of the Supreme Court.
The investigation team would monitor all efforts against black money and accelerate all the income tax assessments against those holding illegal money abroad.
Finance Minister Arun Jaitley in his Facebook post today announced that the government has formulated a conscious strategy to deal with the menace of black money from the very first meeting of the Union Cabinet.
“Most assessments have been completed and wherever illegalities are being found, criminal prosecutions have been launched against beneficiaries of these bank accounts. A total peak balance of about Rs. 6500 crores in these accounts has been assessed. The Government, thereafter, proposed a law for imposition of taxation on undisclosed assets held outside the country,” Jaitley said.
“Since this tax was being imposed for the first time, a ninety day compliance window was offered to those wanting to disclose their unlawful assets. The compliance window ended on 30th September, 2015,” he added.
Jaitley assured that those who chose to declare between this period would not be prosecuted under the new black money law and 638 persons, who declared their income amounting to Rs.3770 crores, could now ‘sleep well’.
He, however, added that those who have undisclosed foreign assets but have failed to file such a declaration will now be subjected to penal provisions of this law.
“They will be liable to pay 30% tax and a penalty of 90%, thus leading to confiscation of the assets plus more. In addition, they will be liable to prosecution where they can be sentenced upto 10 years,” posted Jaitley.
“The assessed income of Rs.6500 crore in HSBC and Rs.3770 crores declared income during the compliance window should not be treated as income under any immunity scheme. The comparison of these amounts with amnesty schemes relating to domestic black money is ill conceived. The campaign against domestic black money has to be separately dealt with for which Government is independently taking steps,” he added.
Training his guns on the Congress, the Finance Minister said that unlike the UPA regime which tried to evade the Supreme Court’s direction on one pretext or the other for over three years, the BJP-led NDA Government swung into action and accelerated all the income tax assessments.
Highlighting the steps taken by the government in order to encourage international cooperation in the matters of tax evasion, Jaitley said that Prime Minister Narendra Modi took the initiative at the G-20 meeting in order to bring about international cooperation in tackling unlawful assets held by the residents of one country in foreign soil.
“The G-20 initiative is intended to lift the veil of secrecy in banking transactions and in real time inform domestic taxation authorities about transactions of their citizens internationally. The Government has signed an understanding with the US under FATCA wherein United States and India would disclose to each other any real time transaction in accounts with financial institutions, by its citizens in foreign territories,” Jaitley said.
The Finance Minister said it is expected this international cooperation will be worked out over the next two years and information with regard to illegal assets held abroad, subject to certain conditions, would be available to each of the demanding nations.
“Thus those with illegal assets abroad, who have failed to make declaration, would now stand the risk of information relating to them eventually reaching the Indian taxation authorities,” he added.
However, he admitted that the bulk of black money is still within India which is why a change in the national attitude, where plastic currency becomes the norm and cash an exception, was a necessity.
The government had earlier issued a warning to those who have not declared black money yet, saying they will ‘regret’ their decision and face the full power of the Centre under the new laws.
“Those who did not declare have underestimated the power of information exchange and will regret it. Fight against black money is a part of economic reforms. As a country we can’t allow ghost economy to undermine real economy and growth,” Economic Affairs Secretary Shaktikanta Das tweeted on Friday.
Das’s tweets referred to the new treaties under which various countries will give each other access to financial information making it difficult for anyone to cover up income in tax havens and other jurisdictions.