Estimating that about $2 trillion black money from India is stashed overseas, ASSOCHAM Direct Taxes Council chairperson, Ved Jain suggested the new government to come out with a six-month amnesty scheme that will facilitate transfer of such funds back home on voluntary basis with payment of 40 per cent tax.
efforts of the new Government to find legal ways to bring black money
stashed abroad to India, ASSOCHAM has submitted proposal to the new
government in this behalf, informed Jain.
?The proposal will
also be sent to the Special Investigation Team (SIT) formed at the
behest of the Supreme Court which has already begun its
deliberations,? said ASSOCHAM Senior Vice President, Sunil Kanoria
while releasing a paper on Black Money along with Ved Jain, R.K.
Handoo, Chairman, Legal Affairs Council of ASSOCHAM and Secretary
General D.S. Rawat.
The chamber which is committed to
encouraging clean business
ethics and transparency in public policy
had commissioned a Theme Paper on the subject ?Black Money Menace
in India? to an expert group in the Chamber and recommended
practical solutions to get these mammoth funds back into the
official channels and contribute to the national building.
amnesty scheme limited to six months suggests a 40 per cent tax on
voluntarily disclosed funds topped with a ten per cent investment of
the total money brought back in infrastructure bonds. The 40 per cent
tax deduction is ten per cent above the maximum effective tax on
income and would dissuade misuse of the scheme for turning internal
black money into white through a transfer mechanism?.
to the paper, the government should not use the revenue for bridging
its budget deficit but channel it to specific projects of larger
benefit including infrastructure development.
An integral part
of this strategy is the total transparency in political funding with
the election expense ceiling off, a real time disclosure of all
sources of funds and expenses out of them and a partial funding of
election expenses for all serious candidates and parties under a
national compact among all stakeholders.
There is also a need
to introduce uniform stamp duty rate applicable across the country.
ASSOCHAM is of the view that a stamp duty rate of three per cent (3
per cent) is fair and reasonable rate. To curb under reporting
further, the organization has also underlined the need in cases of
repurchase of property, for ?benefit of allowing credit of the
stamp duty paid at the time of the purchase.?
reduce the temptation for underreporting of purchase price paid,
ASSOCHAM also wants the circle rate to be notified every year on the
basis of the data input for the preceding year so as to make sure
that the circle rates are as good as the prevalent market
Taking into consideration that a new land acquisition
law has now come into force and bulk purchasers of agricultural land
have to pay higher prices on record to take care of rehabilitation of
the users also, the higher price paid by real estate business
inevitably be reflected in the resale of developed property. If steps
are not taken to rationalise stamp duty and other commitments to the
various government authorities the pressure under reporting would
only be even more than before the new law came into
?Reduction in the stamp duty rate with credit of the
stamp duty paid at the time of the (earlier) purchase will not have
any impact on the revenue collection of state governments and will go
a long way in curbing the menace of black money.?
possible benefits of a well devised amnesty that does not encourage
tax evasion and makes the offender pay for his wrong doing, ASSOCHAM
paper has pointed out that in the United States more than 14,700 tax
payers took advantages of such a scheme in that country and made a
voluntary disclosure. Similar move in Germany saw 20,000 taxpayers
make a voluntary disclosure giving government there about 4 billion
Euros in additional revenues.
According to various studies
that the ASSOCHAM has quoted, the Indian wealth so held abroad
illegally varied from Rs 600 crores in 1953-54 ( or 0.6 per cent of
then GDP) to Rs 60,000 crores per year , the estimate given by the
Indian Institute of Finance. A credible estimate is difficult to
establish. This menace of black money afflicts other countries also
including highly developed economies like the US.
another related problem of Havala, the paper noted that with a
burgeoning number of Indians working abroad and sending money home,
the illegal and parallel transactions have also become as much a
danger as smuggling and a means of siphoning off dollars that should
come to the legal system of the country instead of being diverted
into illegal accounts held abroad.
?India is the world?s
largest consumer of gold in the world
and that there is a general
preference among middle class across the country for keeping their
savings in gold has its own implications for any attempt to cub black
money. As in exchange rate gaps, the aligning of laws and rules with
market realities would help tendency to get gold at any price. There
has also to be massive efforts at educating families to hold savings
in credible and legal financial instruments that are safe?.
restrictions introduced by Indian government on gold and diamond
imports have reduced dollar demand for gold imports, the measures
have also made smuggling of these items profitable to those engaged
in such illegalities. It also led to legitimate business of gems and
jewellary, a huge foreign exchange earner for the country, affected
badly and thereby threatening foreign exchange earnings of the