Tuesday, October 6, 2015

Black Money-PAN card may be mandatory for cash transactions beyond a limit


The NDA Government’s campaign against black money – No society can indefinitely sustain a system where income earners consider tax evasion to be a way of life. Regrettably our high taxation regime in the past eventually ended up encouraging tax evasion. When States tax their people reasonably, they can persuade them to honestly declare their incomes. The early decades after independence witnessed India with high taxation rates, prompting people to evade. The capacity of the State to detect evasion was less than adequate. Over the years, India has slowly started moving towards moderate rates of taxation. It has been a conscious strategy of the NDA Government to put more money in the pockets of middle and low income groups by raising exemption limits and incentivising savings through fiscal policy. This will encourage consumption and bring more money into the system. Consumption increases the volumes of indirect taxation. To make India a more investment friendly destination, I had in the 2015 Budget announced that the rate of corporate tax would be brought down to 25% over the next four years and most exemptions, other than those which incentivise savings, would eventually be phased out. The present Government under the leadership of Prime Minister, Shri Narendra Modi, stands by this commitment. Domestic Black Money The Government is at an advanced stage in considering the requirement of furnishing PAN card details if cash transactions beyond a certain limit are undertaken. The monitoring regime of the income tax has been strengthened and its capacity to access information and apply technology driven analytical tools to expose evasion, has been enhanced. Its ability to detect large cash withdrawals, or large cash transactions which enter the system, is being strengthened. GST regime once introduced will also be a landmark step in this direction. Thus for commodities like gold where the initial purchase by the exporter is after the payment of custom duty, the subsequent transactions which are mostly in cash, can easily be found out. The Government’s policy is rationalization of tax structures, taxing at reasonable rates, placing more money in the hands of small earners, encouraging and promoting the use of plastic money by all sections of society and creating deterrence against those who continue to use unaccounted money. The bulk of black money is still within India. We thus need a change in national attitude where plastic currency becomes the norm and cash an exception. Being seized of this problem, the Government has been working with various authorities in order to incentivise this change. The opening of a large number of payment gateways, internet banking, payment banks and the emerging reality of e-commerce will prompt the use of banking transactions and plastic money rise significantly. The JAM Trinity and the Direct Benefit Transfer of subsidies to the accounts of beneficiaries of various Government schemes will also be a step ahead in this direction. Each of the 180 million beneficiaries of the Jan Dhan accounts has been provided with RuPay cards, which will encourage them to use plastic currency and get familiarised with it. The MUDRA Yojana, over the next few years, has target of sixty million people (which means six crore families out of 25 crore families in India) to become entrepreneurs. Loans being made available to them by the banks can only be withdrawn from the ATMs by use of MUDRA credit cards which are being provided to them. More and more of their transactions will be through plastic currency or through the banking channel. The campaign against Black Money stacked abroad The Government has formulated a conscious strategy to deal with the menace of black money. At the very first meeting of the Union Cabinet, after the swearing in of the Government, we implemented the direction of the Supreme Court to constitute an investigation team headed by two retired Judges of the Supreme Court who would monitor the entire efforts against black money. The UPA Government had tried to evade the Supreme Court direction on one pretext or the other for over three years. The Government swung into action and accelerated all the income tax assessments against those with regard to whom information about holding illegal money abroad in Lichtenstein and in the HSBC bank at Geneva, were available. Most assessments have been completed and wherever illegalities are being found, criminal prosecutions have been launched against beneficiaries of these bank accounts. A total peak balance of about Rs.6500 crores in these accounts has been assessed. The Government, thereafter, proposed a law for imposition of taxation on undisclosed assets held outside the country. Since this tax was being imposed for the first time, a ninety day compliance window was offered to those wanting to disclose their unlawful assets. The compliance window ended on 30th September, 2015. A total tax @ 30% and penalty @ 30% has to be paid by the declarants before 31st December, 2015. Those who chose to declare between this period would not be prosecuted under the new black money law. 638 persons have declared their income amounting to Rs.3770 crores. These declarants can now sleep well. For those who have undisclosed foreign assets but have failed to file such a declaration will now be subjected to penal provisions of this law. They will be liable to pay 30% tax and a penalty of 90%, thus leading to confiscation of the assets plus more. In addition, they will be liable to prosecution where they can be sentenced upto 10 years. This law will create a deterrent in future against the flight of capital from India. The assessed income of Rs.6500 crore in HSBC and Rs.3770 crores declared income during the compliance window should not be treated as income under any immunity scheme. The comparison of these amounts with amnesty schemes relating to domestic black money is ill conceived. The campaign against domestic black money has to be separately dealt with for which Government is independently taking steps. In order to encourage international cooperation in the matters of tax evasion, the Government has taken a series of steps. The Prime Minister took the initiative at the G-20 meeting in order to bring about international cooperation in tackling unlawful assets held by the residents of one country in foreign soil. The G-20 initiative is intended to lift the veil of secrecy in banking transactions and in real time inform domestic taxation authorities about transactions of their citizens internationally. The Government has signed an understanding with the US under FATCA wherein United States and India would disclose to each other any real time transaction in accounts with financial institutions, by its citizens in foreign territories. This cooperation would also extend to all those countries which would become signatories to global standards on Automatic Exchange of Information being developed under the mandate of G20. The Revenue Secretary led a team of Indian officials and has held extensive discussions with Swiss authorities. Discussions have also been held at the ministerial level. Switzerland has agreed to provide India with proof relating to several HSBC accounts where India can give some evidence over and above the stolen data, which was delivered to India through France. It is expected that over the next two years this international cooperation will be worked out and information with regard to illegal assets held abroad, subject to certain conditions, would be available to each of the demanding nations. Thus those with illegal assets abroad, who have failed to make declaration, would now stand the risk of information relating to them eventually reaching the Indian taxation authorities. 

Thanks & Regards

KK Singh
Prop. KK Sir's Classes
wwwkksingh.blogspot.in
wwwkksir.blogspot.in
E mail- kksirclasses@hotmail.com

No comments:

Post a Comment