Black money: govt plans voluntary disclosure scheme soon

Sources said the issue gained momentum recently when captains of industry and business met Finance Minister Pranab Mukherjee and impressed on him the need for encouraging the disclosure of unaccounted money kept in tax havens that could be used to fund infrastructure projects in the country.

A proposal for ushering in a similar scheme was proposed earlier by an expert group on black money to the government.

The thinking in the government comes in the midst of a raging debate over unearthing black money and illegal funds parked abroad.

The ministry is considering the formulation of a such a scheme against the backdrop of India receiving fresh information under Tax Information Exchange Treaties (TIEAs),DTAA and the OECD automatic exchange route.

According to sources,under the scheme in the making,the source of money will not have to be disclosed but criminal action would be taken if the assets or money stashed pertain to proceeds of crime.

Official sources said the committee on black money,headed by the CBDT chairman,was expected to discuss and decide on the proposal in its proposed meeting later this month.

Incidentally,an expert group on black money had earlier suggested that an offshore voluntary scheme might be considered by the government to collect tax on undisclosed bank accounts and assets held by resident Indians abroad.

Experts on the subject said that such a scheme was prevalent and had been implemented in many European countries,the US,UK,Germany,France,Greece,Italy and Portugal among others.

Sources said that now that the country’s efforts to revive and implement the various tax treaties had started giving results,such a scheme could be operationalised as compared to the earlier practice where it was very difficult to obtain bank accounts and assets data of such a taxpayer.

The nitty-gritty of a such a scheme and the amount of penalty etc on the disclosure of such funds stashed abroad could be worked at a later stage,the sources said.

The CBDT through the Income Tax department has taken several measures in the recent past to update the article concerning exchange of information in existing DTAAs to specifically allow for exchange of banking information and information without domestic interest.

India has also decided to negotiate TIEAs with priority countries and jurisdictions.

In the last two years,India has concluded negotiation of 16 TIEAs,18 new DTAAs and renegotiation of 21 existing DTAAs.