Why is India privately closing tax evasion cases by letting Indian Swiss account holders pay their dues on the quiet without formally announcing a voluntary disclosure scheme?
According to a Bloomberg report, an amnesty offer is being made to 100 wealthy Indians on a list of 700 citizens with HSBC accounts in Geneva that French authorities gave to the Indian government last year.
If the Indians agree to bring the money back to India and pay their taxes, the taxmen will not levy any penalty or hold any criminal proceedings against them. Moreover, the names of HSBC clients won’t be disclosed until the income tax department begins prosecuting them.
As a Firstpost story noted earlier, this clandestine effort to collect taxes is not without its hazards. “When the holding of undeclared foreign currency accounts is a crime, how can the tax department deal with it as if it was something normal?
Two, since the Swiss bank list is available both to our politicians and the tax department, what is the possibility that this power will not be used to blackmail people and collect bribes?
Three, when black money is such a big issue politically and geopolitically, can the tax department just do quiet deals with tax evaders?”
However, the Business Standard reported that the finance ministry officials have denied any amnesty to tax evaders for repatriating money parked in Swiss banks accounts to India. However, the government’s white paper on black money which was tabled in Parliament in May to deal with the problem of tax evasion, listed a one-time tax amnesty to recover funds stashed abroad but didn’t suggest any kind of immunity to the tax defaulter. “The Central Government may consider bringing a compliance scheme with reduced penalties, and immunity from prosecution, especially to bring back money kept abroad.’’
In fact the then Finance Minister Pranab Mukherjee mentioned that the liability of Swiss banks to Indians has dropped from Rs 23,000 crore in 2006 to Rs 9,300 crore in 2010, and cited the experience of the US, the UK and other European countries in getting black money stashed overseas through voluntary disclosure of deposits.
A Voluntary Disclosure of Income Scheme was launched by the finance ministry in India in 1997 and it had helped the government increase its revenue collections dramatically in that year.
The issue gained momentum once again when captains of industry and business impressed the need for encouraging disclosure of unaccounted money kept in tax havens which could be used to fund infrastructure projects in the country.
(curtsey : first post)
Head Research Department