In May 2012, the Government of India published a white paper on black money. It disclosed India's effort at addressing black money and guidelines to prevent black money in the future.
India has following institutions already preventing, finding and investigating underground economy and black money.
Central Board of Direct Taxes: is a statutory authority functioning across India under the Central Board of Revenue Act of 1963. The Member(Investigation) of the CBDT,exercises control over the Investigation Division of the Central Board of Direct Taxes.The Member is a high ranking IRS officer of the rank of Special Secretary to the Government of India.The Member controls the:
- Chief Commissioner of Income Tax Central.
- Directorate General of Income Tax Investigation
- Directorate of Income Tax Intelligence and Criminal Investigation.
The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is primarily responsible for combating the menace of black money, has offices in more than 800 buildings spread over 510 cities and towns across India and has over 55,000 employees and even employees who are deputed from premier police organisations to aid the department.
Enforcement Directorate: was established in 1956. It administers the provisions of the Foreign Exchange Regulation Act of 1973 (FERA), later updated to Foreign Exchange Management Act of 1999 (FEMA). It is entrusted with the investigation and prosecution of money-laundering offences, confiscation of the proceeds of such crime, matters related to foreign exchange market and internationalhawala transactions. This India-wide directorate, with focus on major financial centres in India, has 39 offices and 2000 employees.
Financial Intelligence Unit: has been operating as a separate investigative entity since 2004. This government organisation for receiving, processing, analysing, and disseminating information relating to suspect financial transactions. It shares this information with other ministries, enforcement and financial investigative agencies of state and central government of India. Every month, it routinely examines about 700,000 investigative reports and over 1,000 suspect financial transaction trails to help identify and stop black money and money laundering.
Central Board of Excise and Customs and Directorate of Revenue Intelligence: is the apex intelligence organisation responsible for detecting cases of evasion of central excise and service tax. The Directorate develops intelligence, especially in new areas of tax evasion through its intelligence network across the country and disseminates information across Indian government organisations by issuing Modus Operandi Circulars and Alert Circulars to apprise field formations of the latest trends in tax evasion. It routinely arranges for enforcement operations to research into the evasion of duty and taxes. The Directorate of Revenue Intelligence functions under the CBEC. It is entrusted with the responsibility of collection of data and information and its analysis, collation, interpretation and dissemination on matters relating to violations of taxation and customs law. The organisation has thousands of employees and is divided into seven zones all over India. It maintains close liaison with the World Customs Organisation, Brussels, the Regional Intelligence Liaison Office at Tokyo, INTERPOL, and foreign customs administrations.
Central Economic Intelligence Bureau: functions under India's Ministry of Finance. It is responsible for coordination, intelligence sharing, and investigations at national as well as regional levels amongst various law enforcement agencies to prevent financial crimes, generation and parking of black money and illegal transfers. This organisation maintains constant interaction with its Customs Overseas Investigation Network (COIN) offices to share intelligence and information on suspected international financial transactions. The COIN offices gather evidence through diplomatic channels from the foreign custom offices and other foreign establishments to establish cases of mis-declaration to help identify and stop tax evasion and money laundering.
In addition to the primary agencies listed above, India has 10 additional separate departments operating under the central government of India - such as National Investigation Agency and National Crimes Record Bureau - to help locate, investigate and prosecute black money cases. Discovery and enforcement is also assisted by India's Central Bureau of Investigation and state police.
In addition to direct efforts, the Indian central government coordinates its efforts with state governments with dedicated departments to monitor and stop corporate frauds, bank frauds, frauds by non-banking financial companies, sales tax frauds and income tax-related frauds.
MC Joshi committee on black money
After a series of ongoing demonstrations and protests across India, the government appointed a high-level committee headed by MC Joshi the thenCBDT Chairman) in June 2011 to study the generation and curbing of black money. The committee finalised its draft report on 30 January 2012. Its key observation and recommendations were:
- The two major national parties (an apparent reference to Indian National Congress, BJP) claim to have incomes of merely
500 crore (US$84 million) and
- Change maximum punishment under Prevention of Corruption Act from the present 3, 5 and 7 years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in the Income Tax Act.
- Taxation is a highly specialised subject. Based on domain knowledge, set up all-India judicial service and a National Tax Tribunal.
- Just as the USA Patriot Act under which global financial transactions above a threshold limit (by or with Americans) get reported to law enforcement agencies, India should insist on entities operating in India to report all global financial transactions above a threshold limit.
- Consider introducing an amnesty scheme with reduced penalties and immunity from prosecution to the people who bring back black money from abroad.
Tax Information Exchange Agreements
To curb black money, India has signed TIEA with 13 countries -Gibraltar, Bahamas,Bermuda, the British Virgin Islands, the Isle of Man, the Cayman Islands,Jersey,Liberia,Monaco, Macau,Argentina,Guernseyand Bahrain - where money is believed to have been stashed away. India and Switzerland, claims a report, have agreed to allow India to routinely obtain banking information about Indians in Switzerland from the 1st April 2011.
Post a Comment