A compliance scheme with immunity from prosecution to bring back black money from abroad,enhanced penal punishments for corruption-related offences,reporting of all overseas transactions to the tax department and the appointment of a regulator to empanel auditors to improve oversight in the private sector: these are among the key recommendations of the high-level committee appointed by the government in June 2011 to study the generation and curbing of black money.
Its 60-page draft report,prepared under the chairmanship of former CBDT (Central Board of Direct Taxes) chief M C Joshi,was finalized on January 30.
While refraining from putting an exact figure on the size of Indias black economy,the committee has said that the most serious consequence of the growth of black money is to undermine the stability and responsibility of political,legal and economic institutions that might otherwise serve to facilitate the economic development process.
Factoring in suggestions from chambers of industry and the public it got 4,000 emails the committee has taken a swipe at the political parties. It said that while the countrys two major national parties (the parties are not named) claim to have incomes of merely Rs 500 crore and Rs 200 crore,a calculation shows that this would not even be a fraction of their expenses. The Committee has estimated that these parties spend between Rs 10,000 crore – Rs 15,000 crore annually on election expenses alone.
Curiously,the suggestion of an amnesty scheme is the last in the chapter of recommendations in the draft report and simply states: The Central Government may consider brining a compliance scheme with reduced penalties,and immunity from prosecution,especially to bring back moeny kept abroad.
Among the key recommendations:
* Arguing that corruption cannot be treated as less diabolical than money-laundering or commercial production and sale of illicit narcotics, the panel has proposed that punishment under the Prevention of Corruption Act for different offences should be brought at par with offences under the Narcotic Drugs and Psychotropic Substances Act,or at least PMLA or Customs Act. There is thus a need to harmonize punishments under these laws. Change the maximum punishment under PCA from the present 3,5 and 7 years to 2,7 and 10 years rigorous imprisonment.
* “The world has already moved towards institutional specialization based on domain knowledge,India still moves in exactly the opposite direction… taxation is a highly specialized subject,most reversals in court rulings are to be found in tax jurisprudence.. For this,an all- India judicial service as well as a National Tax Tribunal are needed.
* Besides the Lok Pal and Lokayuktas,all social sector programmes at the Centre or state level should be under social audit at the district/field level and then at the headquarters level.
* No system to monitor money transfers made to and received from abroad. The committee has recommended that there should be financial reporting of overseas transactions for better regulation,and such data should be reported to both the Income Tax department and FIU (Financial Intelligence Unit). And that RBI should help put such a reporting mechanism in place.
* Just as the USA Patriot Act under which global financial transactions above a threshold limit,by or with Americans,get reported to law enforcement agencies,India should also insist on entities operating in India to report all global transactions above a threshold limit. For this purpose,appropriate law,rules or contractual/ licensing arrangement with these entities may be framed and implemented.
Swipe At Congress,BJP
Key observations of the Joshi panel
* The two major national parties (an apparent reference to Congress,BJP) claim to have incomes of merely Rs 500 crore and Rs 200 crore. But this isnt even a fraction of their expenses. These parties spend between Rs 10,000 crore and Rs 15,000 crore annually on election expenses alone.
* Change maximum punishment under Prevention of Corruption Act from the present 3,5 and 7 years to 2,7 and 10 years rigorous imprisonment.
* Bring all-India judicial service and a National Tax Tribunal
* Report all global financial transactions above a threshold limit