Generation of Black Money in the Country

The Government had commissioned a study, inter alia, on estimation of unaccounted income and wealth inside and outside the country, which was conducted by National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM). One of the terms of reference of the study was – “To identify important sectors of economy in which unaccounted money is generated and examine causes and conditions that result in generation of unaccounted money”. Reports received from these Institutes are under examination of the Government.

There is no official estimation regarding the amount of black money generated in the country. Varying estimations of the amount of black money have been reported by different persons/institutions. Such estimations are based upon different sets of facts, data, methods, assumptions etc, leading to varying inferences. However, sectoral analysis of seizure of valuables and admission of undisclosed income in the searches conducted by the Income Tax Department in the last three financial years indicates that the main sectors in this regard are real estate, trading and manufacturing, contractors, gems and jewellery, services etc.

The Government has taken effective measures to curb the menace of black money. Such measures include

(i) introduction of a comprehensive new law in the ongoing Budget Session 2015, specifically to deal with black money stashed abroad – The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 – inter alia, providing for stringent penalties (equal to three times the amount of tax payable) and prosecutions (rigorous imprisonment upto ten years with fine) in this regard;

(ii) constitution of a Special Investigation Team (SIT) in May 2014, Chaired and Vice-Chaired by two former judges of the Hon’ble Supreme Court, inter alia, to deal with issues relating to black money stashed abroad;

(iii) while focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest possible for credible deterrence against tax evasion;

(iv) strengthening and streamlining the information collection and enforcement mechanism, inter alia, through extensive use of information technology, capacity building etc:

(v) joining the global efforts to combat cross-border tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis facilitating exchange of information regarding persons hiding their money in offshore financial centres and tax havens;

(vi) renegotiation of Double Taxation Avoidance Agreements with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions to facilitate the exchange of information and to bring transparency;

(vii) Proactively engaging with foreign governments for exchange of information under the provisions of DTAAs/TIEAs/Multilateral Convention;

(viii) exploring non-government sources to obtain information regarding undisclosed foreign assets;

(ix) effectively utilizing the information received from treaty partners to combat tax evasion and avoidance.

This was stated by Shri Arun Jaitley, Union Finance Minister in written reply to a question in the Rajya Sabha today.

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Category : Income Tax (28058)
Type : News (13864)
Tags : black money (732)

0 responses to “Measures taken to curb Generation of Black Money”

  1. Nem Singh says:

    To curb over the unaccounted income & wealth inside & outside the country required batter Government policies to motivate the people to invest the money in productive assets or in development of industry by assuring them for reasonable return on investment through voluntary disclosure scheme not in the form of creating value of the wealth on paper but by depositing the unearth money in the Nationalize bank or other financial institutions and investment schemes.

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