Real estate, trading, govt contracts generate most black money in India: report
05 May 2015
The government is examining a report, which has identified important sectors of the economy, including real estate, trading and manufacturing, government contracts, gems and jewellery, services etc that account for most of the unaccounted money generated in the country.
The centre had instituted a study which, inter alia, looked at an estimation of unaccounted income and wealth inside and outside the country and the causes and conditions that result in generation of unaccounted money, finance minister Arun Jaitley said.
The study was jointly conducted by the National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM), he said.
While there is no official estimation regarding the amount of black money generated in the country, Jaitly said, various estimations of the amount of black money have been reported by different persons/institutions. These are based on different sets of facts, data, methods, assumptions etc, leading to varying inferences. However, sectoral analysis of seizure of valuables and admission of undisclosed income in the searches conducted by the income tax department in the last three financial years indicated that the main sectors in this regard are real estate, trading and manufacturing, contractors, gems and jewellery, services etc.
He said the government has taken effective measures to curb the menace of black money. These measures include:
- Introduction of a comprehensive new law in the ongoing Budget Session 2015, specifically to deal with black money stashed abroad - The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 - inter alia, providing for stringent penalties (equal to three times the amount of tax payable) and prosecutions (rigorous imprisonment up to ten years with fine) in this regard;
- Constitution of a special investigation team (SIT) in May 2014, comprising two former judges of the Supreme Court, inter alia, to deal with issues relating to black money stashed abroad;
- Due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest possible for credible deterrence against tax evasion even while focusing on non-intrusive measures;
- Strengthening and streamlining the information collection and enforcement mechanism, inter alia, through extensive use of information technology, capacity building etc;
- Joining global efforts to combat cross-border tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis facilitating exchange of information regarding persons hiding their money in offshore financial centres and tax havens;
- Renegotiation of double taxation avoidance agreements with other countries to bring the article on exchange of information to international standards and expanding India's treaty network by signing new DTAAs and TIEAs with many tax jurisdictions to facilitate the exchange of information and to bring transparency;
- Proactively engaging with foreign governments for exchange of information under the provisions of DTAAs/TIEAs/Multilateral Convention;
- Exploring non-government sources to obtain information regarding undisclosed foreign assets; and
- Effectively utilizing the information received from treaty partners to combat tax evasion and avoidance.