Black Money Is More Inside Than Outside

Increasing globalisation is the major factor behind the untaxed money that kept offshore by affluent Indian businessmen and politicians. In a recent development, the Government of India expressed her limitations in revealing the names of tax evaders who have piled up their money in foreign banks, especially in Swiss banks. India's bilateral tax pacts mandate confidentiality with these countries doesn't allow to disclose the names of tax evaders. India's tax treaties with foreign countries forbid the government to publically announce the names of tax evaders and this information can be exchanged only with the tax department.

Failure to comply this law can also put Indian banks into a crisis and it will hamper the signing of proposed Intergovernmental Agreement (IGA) with the US which could negatively impact the business of Indian banks. After signing the IGA, financial institutions in India will be authorised to share information on US taxpayers and the similar they will receive in the return. This is a very complex issue which can be dealt through strong political will and reforms in the taxation rules of India. Legally, it is very difficult to disclose the name of an account holder, unless he/she is being prosecuted and taken to court. Meanwhile, India was successful in getting back country's money from tax haven like Mauritius. Bringing back nation's money from such countries is a multi-layered process where the names of tax evaders remained hidden in every stage of the process.

"If we start making such information public, foreign countries will not support the revenue department in sharing the required information, that is why we have to respect and comply international protocol. One shouldn't forget that only 10 percent black money of Indians lie in foreign banks, the government should unearth the black money idle or circulated in domestic businesses which is far greater than the money disposed outside. Sectors like real estate and entertainment are fuelled by this black money, that's why even in the lean season property prices remains high despite poor demand in the market. The Government of India should focus on extracting black money available in the country and bringing the money from Swiss banks should be the secondary objective in resolving the problem of black money."- Kislay Pandey, Money Laundering Lawyer, the Supreme Court of India.

 

"Making all the names public and trying to get the money back may look tempting, but is a very complicated task. The government will get distracted. The best option for the Indian government is to negotiate with tax havens and impose 30 percent tax per annum on all those accounts having black money. It'll be an income for the government. If someone hides it, he should be penalised. Government is fully empowered and is the final authority to take action against tax evaders. Even within India, it's difficult to get back money like in the case of bank defaulters, despite making names in public."- Dr. Rajiv Kumar, senior fellow, Centre for Policy Research and a renowned economist."Making all the names public and trying to get the money back may look tempting, but is a very complicated task. The government will get distracted.