Mandatory reporting of assets held by individuals abroad and re-opening of I-T returns fillings up to 16 years were few of the many measures that Finance Minister Pranab Mukherjee today announced to rein in black money. Mukherjee said the government will also bring a white paper on the subject in the current session of Parliament.
The issue of black money, estimated to stand at $500 billion, was a major source of embarrassment for the government last year, as civil society groups and Opposition members repeatedly stalled Parliament proceedings and put the government on the dock.
To bring back black money, the finance minister said the government will strengthen tax authorities, introduce changes in the tax structure to make evasion difficult and introduce new pieces of legislations.
Announcing his government’s intention of fighting the menace, Mukherjee said the issue of black money was one of the five objectives that the government will effectively address this fiscal year. “The government will expedite coordinated implementation of decisions being taken to improve delivery systems, governance, and transparency; and address the problem of black money and corruption in public life,” Mukherjee said in his Budget speech.
The finance minister announced that the government had signed 82 Double Taxation Avoidance Agreements and another 17 Tax Information Exchange Agreements had been finalised. Mukherjee added that information regarding bank accounts and assets held by Indians abroad had started to flow in and in some cases prosecution was soon to be initiated.
Mukherjee said the government proposed to introduce a General Anti Avoidance Rule in order to counter aggressive tax avoidance schemes, while ensuring that it was used only in appropriate cases, by enabling a review by a GAAR panel. Also, He said the government planned tax deduction at source on transfer of immovable property above a specified threshold.
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| While no definitive figure on the amount of black money exists, CBI Director AP Singh pegged it at $500 billion in February. What is the FM’s strategy? |
| 1.Introduction of compulsory reporting in case of assets held abroad. |
| 2.Allowing for reopening of assessment up to 16 years for assets held abroad. |
| 3.82 Double Taxation Avoidance Agreements and 17 Tax Information Exchange Agreements finalised. Information regarding bank accounts and assets held by Indians abroad flowing in. |
| 4.Directorate of Income Tax Criminal Investigation established in CBDT. |
| 5.White paper on black money in current session of Parliament. |
| 6.Government to introduce Money Laundering (Amendment) Bill, 2011; Benami Transactions (Prohibition) Bill, 2011; and National Drugs and Psychotropic Substances (Amendment) Bill, 2011. |
| 7.Government to introduce a General Anti-Avoidance Rule in order to counter aggressive tax avoidance schemes. |
| 8.Tax collection at source on purchase in cash of bullion or jewellery in excess of Rs 2 lakh; tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold; tax collection at source on trading in coal, lignite and iron ore; and increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value. |
Mukherjee also introduced a number of measures on the tax front to check the generation of unaccounted money. These included: tax collection at source on purchase in cash of bullion or jewellery in excess of Rs 2 lakh; tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold; tax collection at source on trading in coal, lignite and iron ore; and increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value. Further, the finance minister said unexplained money, credits, investments, expenditures, etc, will be taxed at the highest rate of 30% irrespective of the slab of their income.
The minister said the government was committed to the enactment of a public procurement legislation to enhance the confidence in public procurement and to ensure transparency and efficiency in the process. Mukherjee said the Bill will be introduced in the Budget session of Parliament. Also, the government will introduce Prevention of Money Laundering (Amending) Bill, 2011; Benami Transactions (Prohibition) Bill, 2011 and National Drugs and Psychotropic Substances (Amendment) Bill, 2011 with a view to strengthen legal provisions for implementation of the national policy on Narcotic Drugs and Psychotropic Substances.