Begin typing your search above and press return to search.

Black money outflow

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  11 Dec 2015 12:00 AM GMT

Every year, Indians stash more black money abroad than their country spends on defence. In the period from 2004 to 2013, there was a cumulative outflow of 510 billion dollars or Rs 34.1 lakh crore to foreign banks or investment destitions. The average 51 billion dollars sent out every year from India came through tax evasion, corruption, crime and other illegal activities. These are some of the figures published in the latest annual report by the Washington-based think tank Global Fincial Integrity (GFI). It seems a sizeable section of wealthy and corrupt Indians are getting better at this game. In an earlier study, the GFI had estimated that Indians had secreted away 462 billion dollars (about Rs 28 lakh crore in exchange rates then) to overseas tax havens in a 60-year period between 1948 to 2008. The Indian government, on the other hand, had long maintained that no reliable estimate can be made about black money abroad. But the BJP made it a big campaign issue last year, citing its own task force report in 2011 that anything from Rs 31.4 lakh crore to Rs 86.8 lakh crore has been siphoned out of the country. The NDA government did ect a supposedly tough law to crack down on such illegal money. But the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 has proved to be a damp squib — with only Rs 4,160 crore worth of illegal wealth declared within the 3-month compliance window from July to September this year, when the government was expecting declarations at least five-fold larger. Experts have suggested that the 60 percent pelty rate under the new law was too stiff. It simply made black money holders take the calculated risk of keeping it concealed in tax havens, and rely upon their bankers and tax consultants to blunt any government action.

The latest GFI report has put Chi (139 billion dollars per year), Russia (104 billion dollars), Mexico (52.8 billion dollars) and India as the top four countries in the list of black money sources. Identifying illicit fincial flows as the ‘most damaging economic problem faced by developing and emerging economies’, the report has called upon world leaders to focus upon removing opacities that make such flows possible. This should involve measures like tiol governments insisting on full ownership information of all legal entities, while requiring multitiol companies to publicly disclose details like revenues, sales, profits and losses, taxes paid, number of subsidiaries and staff strengths. Customs agencies should be strengthened to detect under-invoicing of trade transactions and closely scrutinise transactions involving foreign tax havens. It should also be made mandatory for banks to know the true beneficiary owner(s) of any account opened. Unless such measures are adopted, it will be impossible to meet the goal of considerably reducing illicit fincial flows by 2030, one of the sustaible development goals (SDGs) adopted by the UN General Assembly this year. At the G20 Summit in Antalya last month, Prime Minister rendra Modi called for ending the ‘excessive banking secrecy’ in some countries, so that ill-gotten money salted away in clandestine accounts can be returned to their country of origin. He also said that if the intertiol community is to collectively fight tax evasion, countries need to follow the ‘common reporting standard’ based on automatic exchange of tax information. In this context, Modi also mentioned bilateral taxation treaties India has signed with several countries, which make it possible to detect anomalies that might indicate tax evasion. Though Modi spoke of India’s ‘zero tolerance’ on black money and corruption, experts have pointed out that domestic black money too is a huge threat to the country’s economy. They have called for better tax policy and amnesty schemes to bring back black money, effective intelligence gathering and prosecution capabilities to deal with brazen tax offenders, checking corruption in the country’s ports, and introducing at the earliest the proposed goods and services tax (GST) to phase out inter-state check gates.

Next Story
Jobs in Assam
Jobs in Rest of NE
Top Headlines
Assam News