Fast-track courts to deal with black money
The White Paper on black money tabled by Finance Minister Pranab Mukherjee in the Lok Sabha favoured a strategic mix of four pillars that will include incentives for voluntary compliance, reforms in vulnerable sectors of economy, creating effective credible deterrence and supportive measures.
The 97-page report does not give out any names of black money holders or estimated of such funds either in the country or outside but refers to estimates made earlier by various domestic and foreign institutions. Improving the reporting and monitoring systems to track bullion and jewellery transactions and simple reporting systems in real estate deals to facilitate the development of a nationwide database were also urgently proposed in reducing flow of black money.
Citing the Vodafone case as an instance of the misuse of corporate structure for avoiding the payment of taxes, the White Paper justified the recent amendment to the Income Tax Act to check avoidance of tax by routing investments through tax havens. Referring to the demands for introduction of voluntary disclosure scheme for bringing back black money stashed abroad, the document said such a measure could be a one time option but they have been criticised for creating future expectations resulting in moral hazards.
"In recent years, the general public sentiments is also perceived to be against giving any immunity to tax evaders who have parked their money outside India. While such schemes help in recovering some of the lost tax revenue, there overall feasibility needs to be examined in the light of other policy objectives," the Paper said.
It also referred to suggestions for a gold deposit scheme with a nominal rate of interest and a complete tax immunity for such disclosure about the source and said "the issue of complete tax immunity needs to be examined in the light of other policy objectives." The document said the introduction of the proposed Goods and Services Tax(GST) would be a "major step" in integrating the efforts of different agencies dealing with black money.
The White Paper also made a case for preventing misuse of "off market" and "dabba trading" on equities and commodities market. Noting that the Income Tax Act has made it mandatory to obtain PAN or Form-60/Form-61 for purchase of bullion above Rs five lakh, the document said there is a need to "catch" all transactions and the best bet would be the proposed GST Act. " …there could be promotion of banking channels including use of credit and debit cards since they leave adequate audit trails and hence disincentivise black money generation.
With electronic transfer facilities being available to trade, one can foresee this as one of major thrusts towards strengthening accountability and discouraging unaccounted activities," it said. Expressing government`s commitment to countering corruption, the White Paper favoured the need to put in place at the earlier the institutions of Lokpal and Lokayuktas at the centre and states, to expedite investigations and bring the guilty to justice.