Black money law: India to join top global league with proposed law


New Delhi: India will join the league of countries like Singapore, UK and the US with its proposed law to check black money, under which those hiding income and evading tax in relation to foreign assets can be slapped with a prison term of up to ten years.

In fact, the proposed imprisonment penalty, as also the monetary penalty, here could be higher than many other countries in most of the cases.

The new law would also provide for a penalty for such concealment of income and assets at the rate of 300 per cent of tax, while offenders will not be permitted to approach the Settlement Commission.

Non-filing of return or filing with inadequate disclosure of foreign assets will itself be liable for prosecution with punishment of rigorous imprisonment up to seven years.

Under the US laws, the federal penalties for each count of conviction of tax crimes include prison term of maximum one year and a fine of $100,000 for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents.

Besides, the penalties include prison term of up to ten years and a fine of $100,000 for “conspiracy to defraud with respect to false refund claims”.

Other penalties include a maximum of three years in prison and a fine of $250,000 for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.

In the UK also, the ‘top tax criminals’ of the year 2012 — a list of 32 individuals — were given a total of over 150 years imprisonment.

The UK’s tax authorities have recently put in place tougher penalties for those who hide assets and income abroad, by doubling the maximum penalty for offshore tax evasion to 200 per cent of the tax dues.

Under the Singapore’s Income Tax Act, any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized four times the amount of tax undercharged and may also be fined an amount not more than 50,000 Singapore dollars or jailed for up to 5 years, or both.

Besides, Singapore’s Goods and Services Act provides that any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized three times the amount of tax undercharged and may also be fined an amount of 10,000 Singapore dollars or jailed for up to 7 years, or both.

While the proposed law in India has been largely welcomed, industry body Assocham today said the government should avoid “over-kill and rush job” in its efforts to check foreign assets’ concealment.

Leading business conglomerate ITC’s Chairman Y C Deveshwar said that the “strong measures to eliminate black money and to impose exemplary punishment is a bold step to curb the parallel economy and mainstream resources for productive growth.”

In a statement, industry chamber Assocham said, “The issue should be approached in a scientific and logical way to ensure that the proposed legislation on concealment on foreign assets does not go in for the over-kill and the genuine business or individual transactions are not subjected to minute scrutiny of the tax inspectors.

“By all means the government should make tough laws, but then to prevent the misuse of the same, the rules and the procedures should be very simple, easy to understand and be not at all left to the discretion of the assessing officers.

“They should not be left to interpretation. Every minute detail should be written in the statute-otherwise, the amendments in FEMA may lead it back to the draconian days of FERA,” the chamber said.

Assocham Secretary General D S Rawat said that Finance Minister Arun Jaitley’s announcement that the government would bring in Bills on Foreign Assets and Benami transactions are welcome moves, but the proposed bills should be well debated in public domain and experts with knowledge of the national and international laws should be consulted.

“It should not so happen that we go in over-kill and the new laws themselves become a main source of corruption…That danger could be real,” he added.

Assocham further said that many Indian professionals, students and corporate leaders travel all over the world and do business transactions or their professional pursuits and the new law should not make the tax compliance cumbersome.

“The problem could be more for the professionals and small and medium enterprises who cannot afford expensive consultancy advice. Thus, while as a nation we stand committed to eradication of black money and corruption, we should not make business eco-system adversarial,” Rawat added.


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