Currently there is a big debate going on in the county on how to bring back the black money to Indian shores. What this black money is all about? Black money is the money stashed by Indians in the banks abroad, particularly in Switzerland to avoid taxation here. The black money has been stashed by money launderers, specially the corrupt politicians, bureaucrats and others. But there has been a fighting going on particularly on this issue for some time now but due to lack of political will, this seems to be never-ending saga.
However, there has been a big upheaval in the country in the recent times over the black money issue with many civil activists like Anna Hazare, Baba Ramdev joining the movement. Thanks to their efforts, the fight against black money has taken a new dimension. Obviously, the fight against black money is gaining momentum and the support base is swelling by the day. This has brought immense pressure on the political leaders to do something serious on this issue. Even the Supreme Court has directed the Government of India to take steps to tackle the black money issue recently.
Following this there has been some sort of initiative on the part of the Indian government to tackle the black money issue. The Union government has recently constituted a committee to suggest a legal framework for confiscating such wealth by declaring it as "national assets". "A committee headed by the chairman of Central Board of Direct Taxes (CBDT) has been appointed to examine ways to strengthen laws to curb generation of black-money in India, its illegal transfer abroad and its recovery," Minister of state for finance S S Palanimanickam said in a written reply in the Lok Sabha recently.
He said the committee shall examine the existing legal and administrative framework to deal with the issue of generation of black money through illegal means. This would involve the wealth generated illegally as national asset besides enacting or amending laws to confiscate and recover such assets and suggesting punishment against its perpetrators. "The committee shall consult all stakeholders and submit its report within a period of six months," Palanimanickam added.
The government has been facing sever criticism in the recent times on the issue of black money not only from the opposition parties and civil
society, but also from the Supreme Court. Besides setting up specialised panels, the government is also amending the existing Double Taxation Avoidance Agreements (DTAAs) with different countries and entering into Tax Information Exchange Agreements (TIEA) with tax havens.
How much money did the Indians had put in the Swiss banks accounts.
However, there is no clarity on the issue. There are several confusing statements on the issue. However, some time back the Swiss banks officials themselves gave details of the money deposited by the Indians in their banks. According to their own statistics: The Indians hold about $2.5 billion (over Rs 11,000 crore) in Swiss banks, but this figure of Switzerland's central bank may be a gross understatement of
the total wealth directly and indirectly held there by the Indians. The ever-growing judicial scrutiny and political outcry over alleged stashing of black money in Swiss banks also seems to be forcing Indian entities to move their money to other safe havens like the Middle East,
Singapore and Mauritius. Some others say that half a billion dollars have been moved out in the last three years, according to the central bank's figures. While the bank did not reveal the reasons behind the flight of money from these accounts, officials at regulatory agencies in India fear that Indians might be moving their funds to safer locations like Mauritius, Dubai and other places in the Middle East region.
The issue of black money, including that stashed away in Swiss banks, has been a matter of intense political debate for many years in India,
while the courts have also widened their scrutiny in recent months.
Recently, the Supreme Court also constituted a special investigation team to probe the matter and has gone on to criticise the government
for not taking all required steps. At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments. India is also revising its bilateral treaty with the European nation to help it get more information about the Swiss bank accounts of Indians. It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.
Hence, the central government needs to take a positive stand and need to contemplate the move of bringing back the Indian money from Swiss banks. One civil rights activist has recently said, "These billions of dollars of Indian black money have been allegedly appropriated from the people of India by exploiting and betraying them. Once this black money is brought back to India, the entire foreign debt like the World Bank loan can be repaid within 24 hours. Even after paying the entire debt,
we will have a surplus amount, which may be around 10 times larger than the foreign debt. The bank's interest gained from the surplus amount will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to govern the nation in a long run without the burden of debts."
The problem of tax-evasion and black money cannot merely be looked upon as an anti-social activity or an unlawful activity. It is rather, like
a cancer in the country's economy which, if not checked in time, will ruin the country's economy. One of the worst consequences of black- money and tax-evasion-is their pernicious effect on the moral fiber of our society which puts a premium on dishonesty and shatters the faith of the common man in the dignity of honest labour and lawful living.
Black-money results in the functioning of a parallel economy in the country. The problem, therefore, needs immediate attention.
Black money in economic terms means 'unrecorded gains'. In other words, it is income which has escaped taxation. It may be hoarded in cash, but eventually gets itself converted into various assets like property, jeweler and durable consumer goods. Various estimates have been made regarding the quantity of black money in circulation. It is estimated that the amount of black-money has reached over Rs. 20,000 crores. The black money has now assumed vast dimensions and menacing proportions. It has been engaging the attention of the government and the public.
Black money arises due to various reasons. Some of those reasons are, unrealistically high rates of taxes in the country. India is at present, "the highest taxed nation n the world”. Besides, the tax laws in country are so complicated that a layman fails to understand it.
Another cause of black-money is numerous controls, licenses and other governmental regulations it is no exaggeration to say that the
controls, licensing and permit system has made black money indispensable to businessmen. Not only do import licenses command a high premium in the black market, but the licensing system has led to corruption at all levels. Black money also arises from political activities such as elections where candidates spend well above the ceiling prescribed by the Election Commission. This huge expenses in turn makes them corrupt. Last but not the least, the black money also arises from illegal activities like smuggling, drug-peddling etc.
Many steps have been taken by the government from time to time to check the tax evasion. Following Wanchoo Committee's recommendations the Government enacted the Taxation Laws (Amendment) Act, 1975. This act
has brought on the statute various provisions for preventing tax evasion and proliferation of black-money Deterrent punishments have been, provided for tax-evasion. The other committees were—the Dangli Committee on Controls and Subsidies (1980), The Rajah Chelliah Committee, and the National Institute of Public Finance and Policy (1985) etc.
Despite the steps taken by the Union government to bring back black money to Indian shores, there is a great deal of work still needs to be done in this matter. However the problem cannot be solved unless, the people of the country join the fight. But the fight can reach a logical end only when the individuals and the institutions, sending the money to abroad realize the folly they are doing to the nation by doing so.
However, there has been a big upheaval in the country in the recent times over the black money issue with many civil activists like Anna Hazare, Baba Ramdev joining the movement. Thanks to their efforts, the fight against black money has taken a new dimension. Obviously, the fight against black money is gaining momentum and the support base is swelling by the day. This has brought immense pressure on the political leaders to do something serious on this issue. Even the Supreme Court has directed the Government of India to take steps to tackle the black money issue recently.
Following this there has been some sort of initiative on the part of the Indian government to tackle the black money issue. The Union government has recently constituted a committee to suggest a legal framework for confiscating such wealth by declaring it as "national assets". "A committee headed by the chairman of Central Board of Direct Taxes (CBDT) has been appointed to examine ways to strengthen laws to curb generation of black-money in India, its illegal transfer abroad and its recovery," Minister of state for finance S S Palanimanickam said in a written reply in the Lok Sabha recently.
He said the committee shall examine the existing legal and administrative framework to deal with the issue of generation of black money through illegal means. This would involve the wealth generated illegally as national asset besides enacting or amending laws to confiscate and recover such assets and suggesting punishment against its perpetrators. "The committee shall consult all stakeholders and submit its report within a period of six months," Palanimanickam added.
The government has been facing sever criticism in the recent times on the issue of black money not only from the opposition parties and civil
society, but also from the Supreme Court. Besides setting up specialised panels, the government is also amending the existing Double Taxation Avoidance Agreements (DTAAs) with different countries and entering into Tax Information Exchange Agreements (TIEA) with tax havens.
How much money did the Indians had put in the Swiss banks accounts.
However, there is no clarity on the issue. There are several confusing statements on the issue. However, some time back the Swiss banks officials themselves gave details of the money deposited by the Indians in their banks. According to their own statistics: The Indians hold about $2.5 billion (over Rs 11,000 crore) in Swiss banks, but this figure of Switzerland's central bank may be a gross understatement of
the total wealth directly and indirectly held there by the Indians. The ever-growing judicial scrutiny and political outcry over alleged stashing of black money in Swiss banks also seems to be forcing Indian entities to move their money to other safe havens like the Middle East,
Singapore and Mauritius. Some others say that half a billion dollars have been moved out in the last three years, according to the central bank's figures. While the bank did not reveal the reasons behind the flight of money from these accounts, officials at regulatory agencies in India fear that Indians might be moving their funds to safer locations like Mauritius, Dubai and other places in the Middle East region.
The issue of black money, including that stashed away in Swiss banks, has been a matter of intense political debate for many years in India,
while the courts have also widened their scrutiny in recent months.
Recently, the Supreme Court also constituted a special investigation team to probe the matter and has gone on to criticise the government
for not taking all required steps. At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments. India is also revising its bilateral treaty with the European nation to help it get more information about the Swiss bank accounts of Indians. It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.
Hence, the central government needs to take a positive stand and need to contemplate the move of bringing back the Indian money from Swiss banks. One civil rights activist has recently said, "These billions of dollars of Indian black money have been allegedly appropriated from the people of India by exploiting and betraying them. Once this black money is brought back to India, the entire foreign debt like the World Bank loan can be repaid within 24 hours. Even after paying the entire debt,
we will have a surplus amount, which may be around 10 times larger than the foreign debt. The bank's interest gained from the surplus amount will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to govern the nation in a long run without the burden of debts."
The problem of tax-evasion and black money cannot merely be looked upon as an anti-social activity or an unlawful activity. It is rather, like
a cancer in the country's economy which, if not checked in time, will ruin the country's economy. One of the worst consequences of black- money and tax-evasion-is their pernicious effect on the moral fiber of our society which puts a premium on dishonesty and shatters the faith of the common man in the dignity of honest labour and lawful living.
Black-money results in the functioning of a parallel economy in the country. The problem, therefore, needs immediate attention.
Black money in economic terms means 'unrecorded gains'. In other words, it is income which has escaped taxation. It may be hoarded in cash, but eventually gets itself converted into various assets like property, jeweler and durable consumer goods. Various estimates have been made regarding the quantity of black money in circulation. It is estimated that the amount of black-money has reached over Rs. 20,000 crores. The black money has now assumed vast dimensions and menacing proportions. It has been engaging the attention of the government and the public.
Black money arises due to various reasons. Some of those reasons are, unrealistically high rates of taxes in the country. India is at present, "the highest taxed nation n the world”. Besides, the tax laws in country are so complicated that a layman fails to understand it.
Another cause of black-money is numerous controls, licenses and other governmental regulations it is no exaggeration to say that the
controls, licensing and permit system has made black money indispensable to businessmen. Not only do import licenses command a high premium in the black market, but the licensing system has led to corruption at all levels. Black money also arises from political activities such as elections where candidates spend well above the ceiling prescribed by the Election Commission. This huge expenses in turn makes them corrupt. Last but not the least, the black money also arises from illegal activities like smuggling, drug-peddling etc.
Many steps have been taken by the government from time to time to check the tax evasion. Following Wanchoo Committee's recommendations the Government enacted the Taxation Laws (Amendment) Act, 1975. This act
has brought on the statute various provisions for preventing tax evasion and proliferation of black-money Deterrent punishments have been, provided for tax-evasion. The other committees were—the Dangli Committee on Controls and Subsidies (1980), The Rajah Chelliah Committee, and the National Institute of Public Finance and Policy (1985) etc.
Despite the steps taken by the Union government to bring back black money to Indian shores, there is a great deal of work still needs to be done in this matter. However the problem cannot be solved unless, the people of the country join the fight. But the fight can reach a logical end only when the individuals and the institutions, sending the money to abroad realize the folly they are doing to the nation by doing so.
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