FICCI submits suggestions to tackle black money

Incentivise cashless transactions, tax agricultural income, says the industry body

Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested Finance Ministry to incentivise cashless transactions and introduce agriculture as few of the numerous measures in order to tackle black money.

Suggesting that cash plays an important role in generation of black money, FICCI said that the cash economy has always been a facilitator of black money since transactions made in cash do not leave any audit trail. “In our view the rural and agricultural sector is a large contributor to the cash-economy,” it added in its paper titled ‘Widening of tax base and tackling black money’ released on Thursday.

“It is imperative that payment of wages and salaries in the private sector should also be through banking channels and should become cashless, in line with the government objective of financial inclusion,” it said in its paper.

FICCI has also suggested major reforms in real estate, expanding the scope of the presumptive taxation, setting up a central database to store invoices, enhancing the tax base by detecting non-filers of income tax returns etc. in order to deal with the issue of black economy.

It added that government can provide tax incentives for use of credit/debit cards as practiced in Republic of Korea in order to promote cashless transacations.

In common parlance, black money can be defined as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession.

FICCI also cited difficulties dealing with issues of parallel (black) economy without an effective solution to agri-economy.

“We propose that the State Governments be encouraged to usher suitable mechanism - while providing reasonably high level of thresholds to avoid small farmers being burdened - for increasing the scope and quantum of agricultural income tax,”it said.