FM to agencies: Set example to make sure others fall in line

Advocates greater use of the Enforcement Directorate’s penalising powers

MONEY LAUNDERING

FINANCE MINISTER Arun Jaitley on Saturday said that financial enforcement agencies need to make an example out of those indulging in money laundering so that others realise the benefits of tax compliance. He advocated greater use of the Enforcement Directorate (ED)’S penalising powers and its special laws to bring people to book.

Referring to special Acts such as the Prevention of Money Laundering Act (PMLA), which has provision for statement recorded in front of an ED officer to be admissible as evidence, Jaitley said that he hoped that with such laws and use of technology, ED would take its cases to logical conclusion.

“Once we are able to make an example of some of these offenders, I think others then will realise the benefits of compliance of law,” he said speaking at an even organised to commemorate the Enforcement Day.

Jaitley stressed on creating an environment that ensures voluntary tax-compliance by people. “There is an expectation of compliance and in the event of non-compliance, there is the power of penalising that the ED has. This power has to be expeditiously used whenever violations are detected,” Jaitley said.

Jaitley said these violations are not difficult to detect and even a smart journalist can detect irregularities by scrutinising filings with registrar of companies.

The finance minister termed money laundering, round tripping, tax evasion and creation of shell companies as a serious offence as the money meant for eduction, healthcare, rural development is being taken away.

“Our target has to be to make sure India as it evolves from a developing to developed economy (also changes) from a tax noncompliant society to a highlycompliant society. Once that were to happen, I think the fear of the law and the fear of the consequences visiting us itself will ensure compliance takes place,” he said.

Jaitley also called for introspection saying that as India evolves, the compliance level too should rise.

“Legal compliances of taxation and currency laws have been a feature of the developed states. If you go to the developed world, violations are rare, but those who violate are strictly called upon and answerable to the law. There are strict penal consequences,” he pointed out.

Despite being conventional in their societal attitude, Indians have never considered noncompliance with taxation and currency law as “morally improper” and instead it was considered as a “smart” act.

“And that is what leads to excessive dealing with cash economy, excessive non-compliance,” the minister noted.

Jaitley said the total budgeted tax revenue collection of over Rs 19 lakh crore would have gone up if there were compliance in India and this money could have been used for funding education, healthcare, the poor and in betterment of infrastructure.