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| Government plans cells for black money declarations under compliance window | | | Agencies
NEW DELHI, May 18: Expecting a flurry of declarations under the compliance window provided by the new black money law, the income-tax department is likely to set up two centres, in Delhi and Mumbai, to process claims from those with dodgy overseas wealth to declare.
The cells, part of a mechanism to receive and process declarations, will be manned by senior tax officials to ensure that those coming clean do not face harassment.
The dedicated centralised units will ensure effective and non-intrusive processing of information in a focused manner, a top government official told ET.
"There will be sensitivities. There will be a team of senior income-tax officials to implement the scheme," the official said adding that the cells will have a hotline with the Central Board of Direct Taxes (CBDT).
There have been deliberations at the highest level of the finance ministry on how to implement the new law. There are concerns over potential harassment and the government clearly wants to avoid any missteps on this count.
The compliance window could be open for 2-3 months to declare undisclosed income and assets. A further six months could be provided to make tax payments. The window will be available only during the current financial year and will be notified soon after the law receives Presidential assent.
The Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Bill, 2015, passed by both the Houses of Parliament, requires all resident Indians to declare foreign assets and income. The law, part of the Narendra Modi-led NDA government's large-scale crackdown on black money, provides a compliance window for all those who have undeclared foreign assets or income to come clean, after paying 30% tax and 30% penalty.
Any wealth or income discovered later will lead to confiscation, imposition of further penalties and prosecution under criminal laws, which could lead to imprisonment up to ten years.
Given the stiff nature of the deterrent, tax officials feel many people will want to come clean. Experts agree that this could happen if those with undeclared wealth feel assured that they will not be harassed. "It is an interesting piece of legislation and will have wide ranging implications. The key will actually be on how the government will enforce this and what sort of machinery is put into place around it," said Dinesh Anand, Leader- Forensics, PwC India.
Finance Minister Arun Jaitley had earlier said on the law: "We are going to make sure that there is no scope for misuse, but at the same time there is a deterrent for those who stock money abroad".
The issue of black money, especially the alleged stashing of illicit wealth in overseas bank accounts in Switzerland, has been part of the political discourse in the country for a long time. It had emerged as a key electoral issue during the 2014 election campaign after the then PM candidate Modi promised stringent action against black money.
There is no estimate of the quantum of black money with Indians. At the end of 2013, Swiss banks were reported to have deposits of Rs 14,100 crore from Indians, up from Rs 8,547 crore a year ago. It is not clear how much of this is black money in the sense of being proceeds of tax evasion or crime.
Global Financial Integrity estimates an average $44 billion outflow from India every year between 2003 and 2012. |
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