The government has started cracking down on people with secret bank accounts abroad, by launching prosecution in the LGT Bank case. It has also initiated action against individuals who illicitly parked their money abroad, as 10 countries have started providing information to India in this regard, Union finance secretary R S Gujral said on Wednesday.
In the case of LGT Bank, prosecution has begun on 18 Indians for allegedly depositing money in the Liechtenstein bank. “The question is only how quickly we can initiate action, how quickly we can recover taxes,” he said. The names are being kept confidential, the government has said, under a government-to-government confidentiality clause.
Asked whether the government would take action against the offenders under the Prevention of Money Laundering Act (PMLA), Gujral said: “As and when it goes to the public domain and if there is a predicate offence, PMLA action can be taken.”
The finance secretary said sharing of past banking information would help raise revenues and tackle the problem of flight of capital, but added such measures would take some time to yield results and that it could take even five years to address the issue of unaccounted money.
On Wednesday, Finance Minister Pranab Mukherjee pressed for greater international cooperation and global alignment of taxation systems to deal with tax evasion and ‘black’ money. “The opacity of tax systems in some jurisdictions is adding to the challenges. We need to pursue this to its logical end,” he said at the 4th ITD global conference on tax and inequality.
Quoting a global report, he said annual illicit outflows from emerging economies and developing countries average between $725 billion and $810 bn.
Jeffrey Owens, director, Centre for Tax Policy & Administration, Organisation for Economic Co-operation and Development, said India had been on the forefront at global forums to press for effective exchange of information to crack down on tax evaders.
The government is seeking to amend 75 Double Taxation Avoidance Agreements and enter into 17 Tax Information Exchange Agreements to tackle the issue. The Central Board of Direct taxes committee on the issue has been given time till January for its report.
