New tax code will cover money stashed abroad, SC told

The authorities detected illicit transfer of Rs33,784 crore profits abroad and Rs15,000 crore undisclosed income of Indians in the last 18 months, the union government  told the Supreme Court on Wednesday.

The government said its proposed direct taxes code seeks to include money stashed abroad and equity or preferential shares in a 'controlled foreign company' held by Indians as part of their taxable assets.

Income tax overseas units are functioning in Singapore and Mauritius, and have also been set up in the US, the UK, the Netherlands, Japan, Cyprus, Germany, France and the United Arab Emirates, it said.

In the face of the court's questioning about steps taken to retrieve black money stashed abroad, pegged by petitioner Ram Jethmalani at Rs70 lakh crore, the government chose to repeat what finance minister Pranab Mukherjee said at a press conference a fortnight ago.

However, the government did not give any answer to the allegation of Jethmalani's counsel Anil Divan that the government allowed Pune-based Hasan Ali Khan, accused of transferring $8 billion from a Swiss bank using wife Rheema Khan's name, to leave India even before the Enforcement Directorate's probe reached its logical conclusion.

But it said the petitioner's estimate of Rs70 lakh crore of black money abroad was unreliable, like most figures on this issue.

It said the government did not have an estimate as most transactions which generate black money were, by their very nature, unrecorded, unreported or complex and layered. However, the court's repeated questioning appears to have forced a re-think.

The government also said it had completed tax information exchange agreements with tax havens or low tax countries like the Bahamas, Bermuda, British Virgin Islands and the Isle of Man.