--------------------RETRIEVING BLACK MONEY STASHED ABROAD ---------------------- If the govt of Mr Modi is sincere about retrieving black money stashed abroad, especially in Swiss banks , formation of SIT ( as mandated by the Supreme Court )) is not going to yield much result .The govt could instead have promulgated an ordinance to nationalize black money and bring them back in consonance with The Swiss Federal Act on the Restitution of Illicit Assets Act ,2010 . Steps need to be taken to prevent generation of black money . Put an end to Participatory Notes ( a brain child of NDA finance minister Yashwant Sinha , later embraced by P. Chidambaram enabling political bigwigs to generate and launder ill-gotten money ). PNs are leveraged instruments involving Indian equity , debt or derivatives issued by Foreign Institutional Investors to individuals or companies wishing to invest in Indian stock market without registering with SEBI . While to open a simple bank account , an Indian citizen has to produce ID proof , PAN no etc foreign investors can hide identity by using PN and invest hundreds of crores ,the main attraction being anonymity . Black money generated in India is sent out by hawala channels and rerouted by PN to the Indian stock market .Fictitious companies as well as terrorists are taking resort to PN to park funds in India amounting to lakhs of crores . Another source of black money is Indo- Mauritius Double Tax Avoidance Treaty. No resident of Mauritius would be taxed in India for capital gains in sale of securities where an Indian would be taxed for such gains . If investments are routed through Mauritius they are exempt from tax . This tiny island in Indian ocean , populated mostly by people of Indian origin account for almost half of FII s and FDI in India causing the tax loss worth thousands of crores . Rationalizing of investing routes and monitoring of all FIIs and FDIs are essential Transparency need to be introduced ( by using IT ) when the govt decide to distribute scarce natural resources so that they are not allotted to cronies which add to generation of black money .
Posted on: Sun, 06 Jul 2014 07:05:46 +0000
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