The new Indian government has intensified efforts to tackle black money. In a new development, the government has received more information on tax evasion. Here are 10 latest developments: 1. India has received details on 24,000 dubious transactions that could involve tax evasion and money laundering overseas. The Supreme Court of India set up a special investigation team or SIT for looking into such deals two months back under retired Justice M B Shah. Most of the information was received from New Zealand, Spain UK, Sweden and Denmark, according to a report by Press Trust of India, a state-owned agency. 2. The information thus received has been sent to the Income Tax department for identifying violations of various provisions of Indian tax rules, the report said. The information was received under the automatic tax information exchange treaties that India has signed with various countries and institutions like Organisation for Economic Co-operation and Development (OECD). 3. The department of revenue in the ministry of finance has identified instances where trade malpractices are used to evade taxes. “Revenue intelligence agencies have noticed new trends in trade-linked money laundering through misrepresentation of price, quantity and content of imports or exports,” according to another PTI report. 4. Global Financial Integrity (GFI), a Washington, US-based organisation, has explained how import over-invoicing works and how an Indian importer illegally moves $500,000 (Rs 3 crore) out of India. “Although he is only buying $1 million (Rs 6 crore) worth of used cars from the US exporter, he uses a Mauritius intermediary to re-invoice the amount up to $1,500,000 (Rs 9 crore. The US exporter gets paid $1 million (Rs 6 crore). The $500,000 (Rs 3 crore) that is left over is then diverted to an offshore bank account owned by the Indian importer,” said the organisation in an explanatory note on their website. 5. Switzerland has recently amended laws to allow tax authorites to assist countries like India on information about people hoarding black money in that country. It has also agreed on not letting these account holders know about such an inquiry or investigation, according to another PTI report. 6. There was very little information from Switzerland. Indians hold about Rs 9,000 crore or 2.18 billion Swiss francs in Swiss Banks at the end of 2012, according to data released by the Swiss National Bank earlier this year. The overall amount held in Swiss banks by entities from across the world is estimated at around Rs 90 lakh crore. 7. An estimated $343 billion moved out of India illegally over the past decade, the latest analysis by GFI of illicit flows out of India said. This makes India the fifth biggest exporter of illicit money in the world, according to a report by GFI. The amount is a quarter of India’s gross domestic product. This is massive. 8. The money thus moved out means loss of tax revenue. On an average individuals and corporations pay 25% of the income as tax. So over $110 billion in tax revenue is lost. This money could transform India’s infrastructure, provide food to the needy and wipe out India’s budget deficits. This could bring down inflation dramatically and lessen hardship to the country’s poor. 9. The report highlights that the black money is largely created in higher education sector, real estate deals and mining sectors. In a White paper on Black Money tabled in Parliament in 2012, the government conceded that the real estate sector is one of the largest holders of illicit income and unaccounted funds. A large number of transactions are not reported and a vast number are under-reported. As the realty sector contributes 11% to the GDP, this high amount of under-reporting is a huge dent to the treasury. 10. Global Financial Integrity’s report titled Illicit Financial Flows found that only 27.8% of Indias illicit assets are held domestically and 73% make their way overseas. In 2012, India was ranked 94 out of 176 countries in Transparency Internationals Corruption Perceptions Index. It was tied with Benin, Colombia, Djibouti, Greece, Moldova, Mongolia, and Senegal.
Posted on: Tue, 12 Aug 2014 14:30:25 +0000
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