In­dia talks tough on black money in hunt for stashed away bil­lions

The China Post - - FEATURE - BY EMILY FORD

When an In­dian dead­line for declar­ing illegal as­sets ex­pires Wed­nes­day, bil­lions of ru­pees hid­den in for­eign bank ac­counts or fun­neled into prop­erty abroad will emerge into the light — or so the gov­ern­ment hopes.

Prime Min­is­ter Naren­dra Modi took power last year pledg­ing to crack down on the “men­ace” of so­called black money — vast piles of wealth kept se­cret from the tax author­i­ties — with a bat­tal­ion of new mea­sures.

A three-month win­dow end­ing on Sept. 30 al­lows tax evaders to de­clare their stash and pay a softer penalty, with im­mu­nity from pros­e­cu­tion, or risk up to 10 years in jail if they get caught.

“The era of tax havens has come to an end. It is no longer safe to keep your as­sets over­seas il­le­gally,” Fi­nance Min­is­ter Arun Jait­ley said in May, shortly af­ter the Black Money Act was passed.

On the cam­paign trail two years ago, Modi claimed 1.5 mil­lion ru­pees (US$23,000) could be given to ev­ery citizen if illegal funds were brought back from over­seas.

But the chal­lenge of ca­jol­ing back into the econ­omy the US$439.59 bil­lion that fled In­dia il­lic­itly from 2003-2012, ac­cord­ing to es­ti­mates from the Global Fi­nan­cial In­tegrity group in Washington, is dizzy­ing.

In­dia is one of the most cash­in­ten­sive so­ci­eties in the world, cor­rup­tion is en­demic, and strict tax laws en­cour­age peo­ple to keep money off the of­fi­cial books.

The wealthy chan­nel money to tax havens such as Switzer­land or Sin­ga­pore, con­vert it into jew­elry, an­tiques, paint­ings or prop­erty, or send a rel­a­tive abroad for half the year to avoid tax.

“The in­ten­tion is clearly to tar­get In­dian cit­i­zens who have stashed wealth over­seas and want to come clean,” Sonu Iyer, part­ner for In­dia tax ser­vices at Ernst & Young said of the dec­la­ra­tion win­dow.

“It is a warn­ing be­fore the gov­ern­ment brings in a very harsh law.”

The Black Money Act is the latest in a widen­ing crack­down by In­dia’s gov­ern­ment, which has set up a team of reg­u­la­tors and ex-judges to iden­tify il­licit ac­count hold­ers and repa­tri­ate hid­den funds.

It has started bring­ing in bio­met­ric iden­tity cards tied to bank ac­counts and last year handed a se­cret list of 627 peo­ple sus­pected of con­ceal­ing money abroad over to the Supreme Court.

The tough stance comes as the global net tight­ens on tax evaders, with new in­for­ma­tion-shar­ing ac­cords be­tween coun­tries and even se­cre­tive Switzer­land re­leas­ing the names of sus­pect ac­count hold­ers in May.

“Those days when peo­ple could hide things abroad and think they will never be found out are largely be­hind us,” V. Anan­dara­jan, joint sec­re­tary of the Cen­tral Board of Di­rect Taxes, told a fo­rum last week.

On the do­mes­tic front, tar­gets for in­ves­ti­ga­tion in­clude tem­ples and ashrams, where lav­ish do­na­tions can be a front for money laun­der­ing, and cricket bet­ting.

The prop­erty sec­tor too is awash with black money, with an­a­lysts say­ing cash is a com­po­nent in most trans­ac­tions.

“Realty is one area where black money is huge. Politi­cians, in­vestors, en­trepreneurs park money, then cash it out later,” Pankaj Kapoor, man­ag­ing di­rec­tor at Li­ases Fo­ras, a real es­tate re­search firm in Mum­bai, told AFP.

But the Black Money Act and another new law that seeks to stop prop­er­ties be­ing ac­quired in another per­son’s name have spooked buy­ers, with sales al­ready tak­ing a hit, Kapoor said.

Opin­ions on the law range from puni­tive to dra­co­nian, with busi­ness body As­socham lam­bast­ing it in Au­gust for spread­ing “con­fu­sion, fear and panic” among in­vestors.

The gov­ern­ment says it does not seek to name and shame and that its pur­pose is sim­ply to force shad­owy as­sets back into the main­stream.

“We have said no witch hunts, no fish­ing in­quiries. We are go­ing to take what is de­clared at face value,” tax of­fi­cial Anan­dara­jan said.

But the crack­down has trig­gered re­ports of mass anx­i­ety among In­dia’s rich, who fear dif­fi­cult ques­tions may fol­low if they come for­ward.

Only a hand­ful of peo­ple are said to have de­clared as­sets so far, although author­i­ties say they have re­ceived 65 bil­lion ru­pees and ex­pect most to ar­rive in the fi­nal week.

Anil Ku­mar, a for­mer High Court judge, told a fo­rum in Delhi that the prom­ise of im­mu­nity may not be enough to al­lay fears of ret­ri­bu­tion.

“There is still am­bi­gu­ity in the minds of the peo­ple, whether this will ex­on­er­ate them from pros­e­cu­tion,” he said.

AFP

In this file pho­to­graph taken on Aug. 25, an In­dian gold­smith makes gold jew­elry at a work­shop in Silig­uri. When an In­dian dead­line for declar­ing illegal as­sets ex­pires Sept. 30, bil­lions of ru­pees hid­den in for­eign bank ac­counts or fun­neled into prop­erty abroad will emerge into the light — or so the gov­ern­ment hopes. Prime Min­is­ter Naren­dra Modi took power last year pledg­ing to crack down on the “men­ace” of so-called black money — vast piles of wealth kept se­cret from the tax author­i­ties — with a bat­tal­ion of new mea­sures.

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.