The Central Board of Direct Taxes (CBDT) is formulating a far-reaching immunity scheme to prompt the repatriation of unaccounted money parked overseas. The proposed scheme could be one of the major announcements of Finance Minister Pranab Mukherjee’s forthcoming Budget speech.
“The income-tax department is currently working on the scheme and discussions are going on in the CBDT,” a senior finance ministry official told Business Standard. “Those opting for the scheme will have to pay tax on the money they disclose,” added the official.
The proposed scheme would help the government raise additional resources next financial year from the tax receipts on the unaccounted funds. The official pointed out that if the immunity programme is drawn up in time, “it may be announced in the upcoming Budget”.
However, a scheme such as this will require strong political support from the political leadership of the Congress party, which leads the UPA coalition at the Centre. However, it could help the Manmohan Singh administration counter Opposition criticism that the government is doing nothing to locate and repatriate black money stashed abroad.
| NON-RESIDENT FUNDS | |
| * Those opting for the scheme will have to pay tax on the money that they disclose | |
| * Scheme may help govt counter Opposition criticism that it’s doing little on the issue | |
| * According to a Global Financial Integrity $462 bn in black money parked overseas |
The issue of Indians with secret Swiss bank accounts was a poll plank during the last general elections. Indians are alleged to have assets worth billions of dollars in Swiss banks alone.
According to a Global Financial Integrity report released in November 2010, entitled ‘The Drivers & Dynamics of Illicit Financial Flows from India: 1948-2008’, money from tax evasion, crime and corruption parked overseas is estimated at $462 billion.
The immunity scheme may be one of the ways of tackling black money. It might, however, face flak from opposition parties, as they have tried to link black money to corruption. The government will also have to consider the implications of such repatriation in the light of the large capital inflows into India in recent months.
