Pranab Mukherjee announces plan to tackle black money issue

Union Finance minister Pranab Mukherjee on Tuesday said though no reliable estimate of black money is available, the government is formulating a five pronged strategy to bring back the money stashed in foreign banks as well as stop further outflow of money.

He also defended the government?s decision not to disclose names of Indians with foreign bank accounts.

As the government faced criticism from the Supreme Court and Opposition parties over its reluctance to disclose names of Indians with foreign bank accounts, Mukherjee addressed a press conference here to ?share with you the proactive steps taken by the government to combat the menace of illicit funds generated both as a result of tax evasion and corruption?.

Mukherjee, pointing that there is no reliable estimate of black money both inside and outside the country, said an interim recommendations of BJP Task Force 2009 have estimated the amount of black money to be between USD 500 billion to USD 1,400 billion, while a current study by Global Financial Integrity has estimated the present value of illicit money outflow to be USD 462 billion.

?Government has been seized of the matter and has constituted a multidisciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens,? he said.

Mukherjee informed undisclosed income of about Rs 15,000 crore has been detected in the last 18 months.

?During the same period, Directorate of International Taxation has collected taxes of Rs 34,601 crore. The Directorate of Transfer Pricing has detected mispricing of Rs 33,784 crore, which has prevented shifting of an equivalent amount of money outside India,? he added.

The Union minister, once again stating the government?s inability to make public the names, said India was bound by international treaties.

?The government has nothing to hide. We can’t get any information on black money unless there is legal framework. Whatever information we have got is on condition of secrecy. We have given names to Supreme Court,? Mukherjee said.

He maintained that if India were to dishonour the international agreements, foreign nations may not share information with it in the future.

In order to address the issue more effectively, the government has formulated a five pronged strategy which consists of joining the global crusade against ?black money?; creating an appropriate legislative framework; setting up institutions for dealing with Illicit Funds; developing systems for implementation; and imparting skills to the manpower for effective action, the minister informed.

Mukherjee said India has completed negotiations of ten new Tax Information Exchange Agreements with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands out of 22 identified countries/jurisdictions.

?India has initiated process of negotiation with 65 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information regarding taxpayers not covered by DTAA,? he added.

The administrative machinery is being strengthened by setting up eight more income tax overseas units, besides the two units operational in Singapore and Mauritius.

Strength of foreign tax division has been doubled and government is setting up an Exchange of Information (EoI) Cell, which will help in effective exchange of information to curb tax evasion, the minister further said.