Dr Subramanian Swamy gave an elaborative speech on the Black Money Bill to a standing ovation from an overflowing audience while speaking at a seminar organised by Moneylife Foundation in Mumbai
Dr Subramanian Swamy, the leader of Bharatiya Janata Party (BJP) said, "The Black Money Bill tabled in the Parliament is not sufficient to eliminate the problem. In addition, there is nothing in the Bill on bringing back black money in India". He was speaking on the new Black Money Bill tabled last month in the Parliament.
The KC College auditorium where the programme took place was filled to the capacity. The attendees included many eminent lawyers, chartered accountants and senior consultants as well.
Dr Swamy while elaborating on how the black money can be used, said, corruption had affected the economy, politics and national security. He said, " Start catching big people, whose information is available with the Enforcement Directorate (ED) and who are involved in this black money business. This will have a deterrent effect for other people and the population would become honest sooner than later."
"Apart from bringing back the black money we need to prevent its creation. Abolishing participatory notes (P-Notes), personal income tax (I-T) and registration charges for real estate is one of the ways to curb creation of black money." Dr Swamy said.
The Black Money Bill, tabled in the Lok Sabha last month, provides a short window to income tax assesses to declare assets, pay tax and penalty and avoid imprisonment. The Black Money Bill appears simple and comprehensive. It has adopted a carrot-and-stick approach. It provides a limited, one-time compliance opportunity to come clean on payment of a gross tax of 30% and an equal penalty.
The Narendra Modi government proposes to make the Bill effective from the assessment year starting April 2016. The Foreign Income and Undisclosed Assets (Imposition of New Tax) Bill, 2015 provides for a maximum of 10 years rigorous imprisonment for offenders who evade taxes in relation to foreign assets.
As per the Bill, concealment of foreign income and assets will be non-compoundable and offenders will not be permitted to approach the Settlement Commission for resolving disputes. There will also be a penalty at the rate of 300% of taxes on the concealed income and assets. The Bill seeks to make non-filing of income tax returns or filing returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment up to seven years.
However, the Black Money Bill does not seems to cover everything that it should. For example, there is no direct mention about those who have become citizens of countries like Macedonia, Bulgaria, Montenegro and Romania but continue to live and operate in India like Indian citizens. In addition, the definition of what is ‘normally resident in India’ and what constitutes ‘place of effective management’ and its interpretation is not clear enough. If tax officials are allowed to decide this at their discretion, it could have serious implications for foreign companies with significant Indian operations. Not to forgot the powers that the revenue authorities may obtain after the passage of the Bill.
Dr Swamy said, "I agree that the Bill contains some harshness and based on assumptions powers may be misused by revenue officials. The Bill is more like an I-T Bill and a de-facto amnesty scheme. The amnesty would also be dropped and in the end it will be just empowerment of I-T officials."
Earlier in a Facebook post, Dr Swamy had said investing black money in Indian markets creates inflation. "The market has started to focus mostly on luxury goods and premium segment services; leaving the underprivileged out. The high realty prices and inflation are all symptomatic of this trend," he added.
According to the former cabinet minister, some of the black money is sent abroad, while some kept here in India and spent on buying and developing land, especially for building luxurious houses with Italian marble. Another way to spend black money was through participatory notes (P-Notes), where money deposited abroad is brought back to Reserve Bank of India as P-Notes and invested in the stock markets.
P-Notes have been accounting for mostly 15-20% of the total foreign institutional investors (FIIs) holdings in India since 2009, while it used to be much higher, in the range of 25-40% in 2008. It was as high as over 50% at the peak of Indian stock market bull run in 2007.
According to the data released by Securities and Exchange Board of India (SEBI), investments into markets through P-Notes surged to the highest level in over seven years at Rs2.72 lakh crore (over $43 billion) in March 2015. The total value of P-Note investments in Indian markets (equity, debt and derivatives) rose to Rs2,72,078 crore at the end of March from Rs2,71,752 crore in the preceding month, the data says.
Few years ago, the BJP leader had claimed that "black money is no more in Swiss banks". However, no one believed him at that time.
He said, the Indian government does not have names of Indians holding accounts abroad illegally except in the case of two banks. This data is also shared by other countries. However, the ED has vast amount of intelligence about black money, which is not even being used by the government. "Give me appropriate power, control over the ED and other agencies and I will get all the black money stashed abroad in two months," the BJP leader said adding that many in the echelon of power from across the parties may not like it if this really happens.
Dr Swamy said the best way forward was to take recourse to the United Nations Convention on Corruption to instruct the tax havens to cooperate. He recalled that in October 2014 he had written to Prime Minister Modi listing six steps through which the government could bring back black money, pegging the amount at about Rs1.2 lakh crore.
He suggested an ordinance declaring all illicit wealth stashed away abroad in tax havens as national wealth. “Under the United Nations Convention on Corruption, each of the countries can be directed to transfer the money back. We anyway have a lot of ordinances. So one more will not matter. I do not think anybody in the Parliament will oppose that...the UN will support you on this and it can be enforced. By this, you would be able to, within 2-3 years, get all the black money,” Dr Swamy added.
According to White Paper on Black Money in India report, published in May 2012, Swiss National Bank estimates that the total amount of deposits in all Swiss banks by citizens of India were 1.945 billion Swiss Francs
(about Rs9,295 crore) at the end of 2010. The Swiss Ministry of External Affairs has confirmed these figures upon request for information by the Indian Ministry of External Affairs. This amount is about 700 fold less than the alleged $1.4 trillion in some media reports.
Main features of the Bill
• Maximum of 10 years rigorous imprisonment for offenders who evade taxes on foreign assets.
• Penalty at the rate of 300% of taxes on the concealed income and assets.
• Income from any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate.
• Beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income.
• Non-filing of income tax returns or filing or returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment up to 7 years.
A close above 8,400 in Nifty will mean a short-term rise
The S&P BSE Sensex closed the week that ended on 24th April at 27,438 (down 1004 points or 3.53%), while the NSE’s CNX Nifty closed at 8,305 (down 301 points or 3.49%).
In the previous week, we had mentioned that the 50-stock Nifty is still under pressure and will have to close above 8,700, as a first step for the downtrend to reverse.
On Monday, a sudden plunge in the last hour of the session made the Nifty hit a 12-day low. Nifty closed at 8,448 (down 158 points or 1.83%). Ratings agency Fitch said the likely upturn in the India's investment climate and reduction in interest rates will improve the property market by the end of March 2016 and provide relief to the debt-ridden developers.
The 50-stock index witnessed a volatile session Tuesday and closed in the red for the fifth consecutive session. Nifty closed at 8,378 (down 70 points or 0.83%). The Indian government plans to auction 69 marginal oil and gas fields owned by state explorers ONGC and Oil India, Oil Secretary Saurabh Chandra said.
On Wednesday, Nifty took support slightly below the level of 8,300 as we had mentioned in Tuesday’s closing report and closed in the positive breaking the trend of five days of consecutive loss. Nifty closed at 8,430 (up 52 points or 0.62%).
The India Meteorological Department (IMD) said that quantitatively the seasonal monsoon rainfall is likely to be 93% of the long period average (LPA) during the June-September southwest monsoon season this year, with a model error of plus/minus 5%. The probability for below normal rainfall is 35%, for deficient 33% and for normal 28%.
Against our anticipation, on Thursday Nifty gave up its gains. The benchmark closed at 8,399 (down 31 points or 0.37%), even though the finance ministry clarified that foreign portfolio investors domiciled in countries that have signed double taxation avoidance treaties with India will not have to pay minimum alternate tax.
On Friday, the loss on the Nifty continued especially after Infosys results disappointed.
Although it reported a marginal growth over the March 2014 quarter, its top line and bottom line fell as compared to the December 2014 quarter. Nifty closed 8,305.25 (down 93 points or 1.11%). We expect the market to remain weak but it is very close to a short-term bottom. If Nifty does not go below 8,250, it may rally for the short-term.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
The report titled "Reviving the Ocean Economy" attempts to estimate the value of the oceans and proposes steps for its safeguarding
Ocean assets such as fisheries, shipping lanes and tourism are worth $24 trillion and produce an annual value of $2.5 trillion from their outputs, says a latest report by the conservation group World Wide Fund (WWF).
The report titled "Reviving the Ocean Economy" attempts to estimate the value of the oceans and proposes steps for its safeguarding.
"If the oceans were a country it would be the seventh-largest economy on the planet. I do not think that is surprising to any marine scientist but it may come as a surprise to a lot of people outside marine science," said marine scientist and lead author Ove Hoegh-Guldberg, director of the University of Queensland's Global Change Institute in St Lucia.
"Being a natural scientist, I am suspicious of economists."
"But when you look at different numbers, this is not too far off what other people have found in terms of components of the total value," Hoegh-Guldberg noted.
The report looks at the oceans as one system which has not been the case in previous efforts.
"In the past, we have missed that opportunity to look at the interactions between local and global factors, between fishing and ocean chemistry and so on," he added.
The report comes up with a very large number despite the fact that we can not value the many intangibles such as the production of sand along coastlines, the value of oceans in terms of their contribution to cultures, and so on.
"We do not make any apologies for the fact that we cannot get the real value. But we can get a number which we know is the minimum, and in this case it is a very large number," he continued.
The eight proposed actions in the report include committing to ocean targets in the UN sustainable development goals, agreement on avoiding damage from climate change and a new alliance of maritime states.
"The eight actions are achievable. We have already had a big push at the international level to establish sustainable development goals focused on the ocean," the authors emphasised.