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  1. Black money ain’t back: Amnesty scheme a wake-up call for BJP

Black money ain’t back: Amnesty scheme a wake-up call for BJP

The fact that the govt has got just 638 declarations with Rs 3,770 crore of foreign assets under the black money amnesty scheme that ended Wednesday night should be a wake-up call for both the govt as well as senior BJP leaders who had made this a big campaign issue during the run-up to the elections as well as after coming to power.

By: | New Delhi | Updated: October 1, 2015 7:08 PM
Black money

Which is why, the government will do well to focus more on ways to catch the current generation of black money and not obsess about the stock. (Reuters)

The fact that the government has got just 638 declarations with Rs 3,770 crore of foreign assets under the black money amnesty scheme that ended Wednesday night should be a wake-up call for both the government as well as senior Bharatiya Janata Party (BJP) leaders who had made this a big campaign issue during the run-up to the elections as well as after coming to power. While LK Advani used the Global Financial Integrity (GFI) data to talk of how Indians had $462 bn stashed overseas, yoga guru Baba Ramdev hiked this to an astronomical $8.8 trillion – even if you keep in mind the most liberal estimate of the black economy in India, given the vastly higher returns in India, it never made sense that such large amounts would be kept overseas; indeed, one of the criticisms of participatory notes (PNs) was that they allowed overseas Indian funds to come back home. Indeed, some months ago, as part of the black money mission, the tax department put out a press release on how searches of 414 corporate groups had led to seizures of Rs 582 crore of assets and Rs 6,679 crore of undisclosed incomes; another 1,174 surveys, the release added, led to detecting another Rs 4,673 crore of income – given India’s tax collections this year are projected at Rs 14.5 lakh crore, this is not even peanuts.

Even the GFI numbers, ironically, made this clear once you put them in perspective. According to GFI, the money being siphoned off overseas fell from $45 billion in 2008 to $29 billion the next year, jumped to $68 billion in 2010 and $85 billion in 2011 – those are large numbers and this is income that needs to be taxed, but it added to just 5% of GDP in that year. This is where keeping perspective is important. India’s tax-to-GDP ratio has been stagnating, even falling, from 17.6% in FY08 it fell to 15.1% in FY10 and then recovered to 16.8% in FY14, and this is after introducing revolutionary changes like VAT and increasing service taxes to almost all services today. Just raising the tax-to-GDP ratio by one percentage point will get another Rs 1.4 lakh crore or roughly 10% more than the projected taxes for the year.

Which is why, the government will do well to focus more on ways to catch the current generation of black money and not obsess about the stock. A simple example makes this clear. Assume India had Rs 100 of GDP 5 years ago and 30% of this was black – so the stock is Rs 30. If the proportion of the black economy stays the same, this means Rs 60 of fresh black money is being generated today, given the economy is growing by around 15% a year. Focussing on this means getting GST going since, once successful, it will track most transactions in the economy. Income tax data, similarly, suggests large evasion by those in the middle-income group of Rs 10-20 lakh. Indeed, the Tax Administrative Reforms Commission (TARC) had pointed out that the taxman does not efficiently use the reams of data it gets on spending from Annual Information Returns (AIR) – this includes spending on property, on jewellery, on cars and so on. Data put out by the taxman a few years ago pointed out that India had just 14.6 lakh persons declaring a taxable income of more than Rs 10 lakh while 16 lakh persons made credit card payments of more than Rs 2 lakh in FY13 and 52.4 lakh persons spent more than Rs 2 lakh buying mutual funds in FY13. Which is why TARC estimated that India has to have at least 6 crore taxpayers today as compared to the 3.5 crore we actually do. Widening the tax-base and the 360-degree profiling the direct taxes chief has talked about have to be top priority, not chasing old ghosts, even if that was an election promise.

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  1. Balchandhar C As B
    Oct 3, 2015 at 2:56 pm
    Amnesty curtian has drawn. not much black money. As Jaitly said the govt. must take its whip and and beat the black marketeers and those responsible for this illicit money.GST is a weapon to eliminate this malice but unfortunately it was stalled by Cong in Parl, fearing that their loyalists and leaders will be got in the black money web.They want to stall all proceedings in Parl. so that NDA can be tarnished with incapable govt. and Modi must stop this and his actions must prove this in the days ahead.
    Reply
    1. Hemen Parekh
      Oct 2, 2015 at 11:44 am
      FROM GREED TO GREAT ? In my blog of 18th Sept , I had estimated BLACK MONEY disclosure of ( may be ) , Rs 40,000 crores , under Undisclosed Foreign Income and ets Act - 2015 That would have netted Government , Rs 24,000 Cr by way of tax / penalty I was way off the mark ! The 3 month opportunity window closed two days back , with a disclosure of Rs 3770 cr , by 638 persons , netting Govt Rs 2262 cr ! Quite like , " Digging the Mountain to find the Mouse " Now , some knowledgeable persons / organizations have estimated that the amount of BLACK MONEY stashed away domestically , could be close to, Rs 25 Lakh*Crores ! But then , man-on-the-street guesses that to be Rs 100 Lakh*Crores ! Time and again , that common man have proved the pundits wrong ! I suppose , the common man knew all along that half-hearted amnesty schemes are bound to fail , as in the past But pundits refuse to learn from their past mistakes ! They refuse to recognize that nowhere in the World , any Government has succeeded at any time to legislate the GREED away ! And fail to understand why NDA government is hesitating to harness the unlimited power of SUN - the almighty SUN OF GREED By : * Abolishing Personal Income Tax ( source of the DARKNESS of CORRUPTION ) * Stop asking any questions as to the " Source " for all cash deposits made into bank accounts opened under Jan Dhan Yojana * Levy a Bank Transaction Tax ( BTT ) of 2 % to yield revenue of Rs 15 lakh*crores , which would be 5 times the loss of revenue due to abolition of Personal Income Tax * Encourage deposits made into Jan Dhan bank accounts to be invested in SOLAR POWER SPV Farms , by direct depositing of income derived ( from of electricity to DISCOMs ) into those bank accounts - again free of Personal Income Tax ( setting in motion, a VIRTUOUS CIRCLE ! ) NDA is planning to harness 100 GW of Solar Power by 2020 If above-mentioned suggestion is implemented , India could harness 1000 GW of Solar Power by 2020 ! Just imagine what that could do to GDP / SELF-EMPLOYMENT / CLIMATE Let us harness GREED to make INDIA GREAT ! ------------------------------------------------------------------------------------- hemen parekh 02 Oct 2015 B2BmessageBlaster
      Reply
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        Rameswar Pattanayak
        Oct 2, 2015 at 9:51 am
        Now Govt should make all transactions beyond Rs 20000 compulsorily electronic and linked to Aadhar number. It should be enriched by providing relief of 0.5% reduction in tax to buyer. Enable real time transfer of tax and other Govt dues at the time of transaction and free the seller from filing periodical returns. Issue Rs 10,000 note transferable by record only by link to Aadhar number. This may decimate generation of black money itself.
        Reply
        1. R
          Ranjit Whig
          Oct 2, 2015 at 12:39 am
          Rs 15 /- in our bank accounts ,better than Rs15 Lakhs in 100 days of Congress Mukt Bharat or OROP ! Some more marketing for Acche Din for ,"skeel India" and what have you.
          Reply
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            Vijay
            Oct 2, 2015 at 5:31 am
            Modi & Jaitley are performing to the best of abilities, intelligent & wisdom to bring black money stashed abroad to give 15 lakhs to each Indian. We should not criticise them.
            Reply
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