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Action against tax avoidance and other economic frauds
The new government in New Delhi led by PM Narendra Modi has taken a concrete step to account for black money by establishing a special investigating tribunal (SIT) to probe tax avoidance and various other economic frauds. The SIT would specifically probe unaccountable money being deposited by Indians in Swiss Banks and other global tax heavens since decades and possibly by foreigners as well, who own a part of their money to Indian Union government.

The move by the PM Narendra Modi should be welcomed by all those who believe in probity and accountability in public and economic lives and other than BJP taking the credit, people like Baba Ramdev and Dr. Subramanian Swamy should also be hailed. The move is good in intent and will not end in segmentation among various political parties and business houses, I suppose.

I am sure that the Indian government should have consulted legal experts on the issue before ordering probe and also that it would be able to cross all legal hurdles. By this time it should have confirmed with Swiss authorities that their banks are fully compliant to heed up to complaints by national governments of all sorts, though in my opinion Indian authorities would have to prove almost half of economic frauds themselves in order to have full access to depositors' secretive data.

In more recent times after the formalization of SIT, two reports have been published in various newspapers: first that Indians have around 140 billion INR legally deposited in Swiss Banks and second that Swiss authorities themselves have offered help to their Indian counterparts about the information on black money depositors in Switzerland. 

The first could be misleading or contradictorily a pointer towards the actual sums. On the second, the Finance Minister Arun Jaitley clarified the very next day, after it was published in various newspapers, that his office has not received any sort of offer of help from Swiss authorities.

Though it's a late reminder and many of the steps Modi-government itself shall have taken by now but still the Union government should take the following precautions:

1. It should put the correct estimate and should not inflate the data neither people's expectations for cheap populism.

2 It should be realistic in approach as it cannot confiscate the whole amount. It can get the tax due to the Indian government plus some surcharge for violations of Indian and possibly those of some international laws. The actual amount that the Indian Union government can recover is: tax, the violators owe+10percent charge for tax evasions and avoidance+10 percent for Indian government not initiating criminal proceedings and offering general pardon to all accused, which would amount to mostly 50 percent of the total tax evaded money if 30 percent general rate of tax is applied. No interests shall be paid to Indian government by any individual or organization. By no account can the Indian government get more than that and rest would belong to the depositors.

But on the positive side any individual, company, or organization operating in India or outside it which owe Indian Union government tax or other dues come within the Indian jurisdiction whether they are Indians or foreigners. The foreign nationality cannot be the excuse to deny Indian Union government its dues. 

It should be noted that even if it was illegal to deposit money by Indians up to sometime and money was deposited before that very legality or if it required formal procedures to follow and such were not taken by money launderers even then money deposited is not fully black as per Indian evaluations. Sure, tax evasion is a crime in almost all parts of the globe and certainly in India though Swiss government may be relaxing on taxes on the money deposited in their nation's banks. But for other governments because of safe tax heavens their income receipts get reduced. 

However, all need to know that the laws on elites in India are at the most applied with as much precision as it is applied on middle classes and other commoners. All elites belong to upper caste as per Indian traditions, irrespective of their identities and therefore, there is a limit up to which honesty and consistency should be expected from the political and bureaucratic elites.

3. Indian officials should study all tax treaties with various nations and should also carefully study double tax avoidance treaties with other nations. India cannot excessively apply its national laws in those circumstances where international laws are applicable or the sovereignty of other nations is the pressing point. The officials should also remember that the whole process is a bit cumbersome. 

4. It should not induce much populist sentiments among the people of India as the government cannot punish the offenders and other fraudulent people as they could be India's biggest names in businesses and possibly, by extension, in politics.

5. The Swiss Banks would only reveal the names of depositors and the rest of investigation and their prosecution in India and abroad, in case the supposed violators don't comply and cooperate, shall have to be carried out by India itself. If the defaulters don't cooperate with Indian authorities then in that case Indian government can only request freezing of their accounts but under no circumstances shall the Swiss Bank transfer the money to India immediately. India shall have to chase and prosecute all fugitives, if any, on its own. 

The frozen money cannot be transferred to India so easily and it may take decades before that money can be transferred to Indian government that too after the positive interventions by Swiss and American courts. The type of currency in which probable payment be made would depend on a lot of complex factors, the most notably on the net amount. Higher the amount less precious will be the currency in which it shall be remitted.

6. The Indian Union government should make it very clear that there would be no relaxation on collection of tax receipts from the taxpayers. Also, that it would take some good lengthy time before the whole process could be completed. It should rather make it clear that it would invest recovered amount, if and when it happens, on R&D, infrastructure, education and on providing some subsidies to the most needy.

I repeat that Indian authorities should first consider all legal aspects in deepest details. It should make sure that it does not fall into any legal trap. Now better thing would be that Indian authorities present the tax evasions and other fraudulent crimes to Swiss authorities themselves or else the latter may not cooperate fully or may like to bunk the issue in longer terms. Indian government can complain only about those who have avoided or evaded tax due to it and not about other depositors.

All need to know that even if the Indian authorities have done their proper legal works and have presented tax evasion and money laundering cases to Swiss authorities, the Swiss Banks will initially only reveal the basic information about its depositors and at the most they won't allow transfers of their accounts out of the Swiss Banks. 

All need to understand that private wealth should be most protected in the Switzerland after the US, when the size of banking transactions is taking into account, and therefore, laws on protection of private wealth and one's right to posses are mostly tougher in Switzerland than thought in India.

I cannot make even a crude guess about how much money is deposited in the Swiss Banks by Indians and foreigners earning from their Indian operations, part of which they owe to Indian government, but it shall be windfall whenever it comes though from the above arguments it should become clear that it will test Indian government's patience. Mr. Jaitley should understand that he cannot rely on this windfall in his first two budgets at least.

But anyway move is welcome and the public and media should welcome it too. I am sure that Indian government has not missed any legal points when ordering such probe and also that the Swiss authorities would cooperate to the fullest with the investigating Indian authorities.

The fact is that the BJP-led NDA government's efforts to bring back home black money deposited in secretive Swiss banks and other tax heavens worldwide is praiseworthy and laudable but except for only few enthusiasts, few others should expect those big sums that the anti-laundering campaigners predict.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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