New India Law to Tackle Black Money With Jail Time for EvadersBhuma Shrivastava and Anto Antony
India plans to tackle unaccounted money usually stashed away in secret overseas bank accounts with a new legislation that calls for steep fines and even prison term for offenders.
The government will introduce the bill in the current session of Parliament, Finance Minister Arun Jaitley said in his budget speech today. If approved by the members, those hiding income and evading taxes on foreign assets could face up to 10 years in jail and a penalty of as much as 300 percent of the amount originally owed to the government.
“The first and foremost pillar of my tax proposals is to effectively deal with the problem of black money which eats into the vitals of our economy and society,” said Jaitley.
The new law underscores Prime Minister Narendra Modi’s resolve to unearth black money, a key campaign pledge that helped him win the largest electoral mandate in three decades. He created an investigative team on his first day in office in May. Domestic black money trails, especially those that get invested in real estate will also be targeted, Jaitley said.
Asia’s third-largest economy is joining countries including the U.S. and Britain in cracking down on rich people who haven’t reported offshore funds. The nation ranked third in the world for money illegally moved overseas in 2011, behind China and Russia, according to a 2013 report by Global Financial Integrity, a Washington-based group researching cross-border money transfers.
Hidden overseas assets belonging to Indians are estimated at as much as $2 trillion, more than India’s annual gross domestic product, according to Arun Kumar, author of “The Black Economy in India.”
“A strong deterrent for generating or holding black money will have a direct bearing on augmenting tax revenue and increasing tax base,” Vipul R Jhaveri, partner at Deloitte Haskins & Sells LLP, said in an e-mailed statement today.