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Amnesty scheme on cards for black money

-The Times of India

 

The finance ministry is devising a voluntary tax disclosure scheme that could provide amnesty to people who have stashed unaccounted money in tax havens and other jurisdictions abroad by charging them a "levy".

Finance minister Pranab Mukherjee, after a meeting with industry captains recently, activated a committee on black money set up last year to work out a scheme on voluntary disclosure. This scheme will allow corporates and others who have maintained secret accounts in foreign countries to declare their unaccounted wealth and bring it back into the economy after paying a "levy".

Sources said devising an amnesty scheme was one of the demands of industry captains who had met the FM last month. Those present in the meeting included Ratan Tata, Anil Ambani, Anand Mahindra, Y C Deveshwar, N R Narayana Murthy, G M Rao, R P Goenka and Shashi Ruia among others.

Industry leaders, sources said, had argued that such money lying idle could be brought back to the country and invested in infrastructure sector where the government requires funding to the tune of $1 trillion over the next plan period. The government has, so far, received only $100 million through corporate infrastructure bonds from FIIs.

Last year, the government had constituted an expert group to devise a voluntary disclosure scheme. However, it could not be finalized following opposition from several quarters.

Now, the government is equipped with better information on black money stashed abroad belonging to Indians through tax exchange agreements it has entered into with many countries.

In May, the Swiss parliament approved amendments to DTAAs with countries that had recently revised their tax treaties with Switzerland. India was one of the beneficiaries. The two countries had signed a revised DTAA last year after year-long negotiations and the changes will help the government get account details of Indians.

The G-20, of which India holds the position of vice-chairman, and OECD had put pressure on Switzerland and other tax havens to disclose information even if they were only of domestic interest of the requesting state and for the purpose of enforcement of tax laws.

More than a dozen existing DTAAs are up for revision and the government is renegotiating 18 DTAAs with countries with which it has no such treaties. At least 22 tax havens have been identified and Tax Information Exchange Agreements (TIEAs) are being negotiated with them.

India has signed TIEAs with six of them, including Bahamas, Bermuda, British Virgin Island, Cayman Island and Isle of Man. Round-tripping of funds have been reported from many of these jurisdictions.

To gather information on tax evaders and flight of capital, CBDT has set up two overseas income tax units, in Singapore and Mauritius, from where most of the alleged round tripping activities take place. Very soon, CBDT will set up eight more such units in US, UK, Netherlands, Japan, Cyprus, Germany, France and UAE.