Black Money Bill not sufficient to eliminate the problem, says Dr Subramanian Swamy
Moneylife Digital Team 24 April 2015
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.

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  • • Penalty at the rate of 300% of taxes on the concealed income and assets.

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  • • Income from any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate.

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  • • Beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income.

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  • • 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.

 
 

 

Comments
manoharlalsharma
6 years ago
Black Money Bill not sufficient to eliminate the problem, says Dr Subramanian Swamy./U R RIGHTLY SAY BECAUSE U R SO CLOSE IN STUDYING people of such CATEGORY and this r the things which out of college curriculum./thanks
vswami
6 years ago
Not Unrelated; but viewed from a different angle:

http://vswaminathan-swamilook.blogspot.i...
SuchindranathAiyerS
6 years ago
It is unlikely that anything will change until: (1) Inequality under law and exceptions to the rule of law are expurgated from the Constitution and laws of India. (2) Bribe Taking is defined as criminal extortion or treason and made a capital offense with special rules of evidence and special courts with summary powers (akin to a Military Court Martial). (3) All court proceedings are video graphed and archived for public viewing and can be used as evidence to prosecute Judges and Magistrates at all levels under special laws and special courts with summary powers akin to a military Court Martial, for insouciance, negligence, tardiness, disregard for law and propriety, behaviour unbecoming of a Judge such as lack of etiquette and manners, (4) every job on the "Public" i.e. Government Pay Roll has specific and unique Key Responsibility Areas, Key Performance Parameters and Objectives for which they are held accountable on pain of summary dismissal for non-performance or life imprisonment for treason for sabotage under special laws and special courts with summary powers akin to a military Court Martial and (5) India creates an Ombudsman Service of reemployed and retrained military officers (Colonel and Below, JCOs and NCOs) who retire before 50 to serve as presiding officers, investigating/prosecuting and enforcement officers at the afore mentioned "Special Courts", one for every taluk with powers to arrest, incarcerate, try and punish any and all from the President of India to a peon in accordance with the Special Laws framed therefor.
Davidson D
6 years ago
Can the video be uploaded on the URL
Davidson D
6 years ago
Can the video be uploaded on the URL
Dr. Rakesh Goyal
6 years ago
Minor correction in the first post, few minutes back -

In the last para, there are some calculation inconsistencies -
Rs. 92.95 crores = 9295000 crores
Read this as 92.95 lakh crores and not 92.95 crores.
My error. But, these are so big and not-natural figures that though the mind thinks but the hand at key-board is not accustomed to write.
MDT
Replied to Dr. Rakesh Goyal comment 6 years ago
Thanks Dr Goyal for pointing out the error. It is now rectified.

Regards,
MDT
Dr. Rakesh Goyal
6 years ago
Dr. Swamy said in the talk that 75% MP in the current parliament are "honest". Slightly unbelievable but if he says so, I trust him. Agreed.

Can he name and shame the balance 25%, who are other than "honest".
;-))
Dr. Rakesh Goyal
6 years ago
Apart from bring back black money slashed abroad, more stress must be on control/elimination of generation of black money. It is still generated and used for various purposes such as slashing abroad, artificial inflation, economic lopsided imbalance, real estate, terrorism and providing multiplier effect to further black (non-tax-paid and not declared) money.

Following are some of the main sources - (a) Corruption in natural resources (mines, ore, oil, water, airwaves, etc.); (b) government contracts; (c) slashing in projects (example - road, irrigation,, etc); (d) bribes/commissions; (e) Education (last year study calculated Rs. 48,400 crores / year); (f) over/under invoicing; (g) Health care; (h) stock market manipulation (example p-notes) are some of the avenues to generate black money. This is not the exhaustive list.

I am sure and as stated by Dr Swamy, ED and IB must be aware of all these but these institution can not do anything unless there is rock-solid political will as they (parrots as per Supreme Court) can not go against their masters.

Modi-ji is putting control over some of these corrupt practices such as coal-mine, airwaves, G2G deal in defense but many are still to be addressed.

Further, a detailed study need to be done to estimate the quantum of black money generated by various activities.
Dr. Rakesh Goyal
6 years ago
In the last para, there are some calculation inconsistencies -
Rs. 92.95 crores = 9295000 crores
1 bn USD = Rs. 6300 crores (@Rs.63/USD)
Thus 9295000 crores will be 1475.4 billion USD = 1.475 trillion and not $2.1 bn. If Rs. 92.95 lakh crores is correct, the figure of 1.4 tn is also correct. Rs. 2.1 bn = Rs. 13230 crores is peanuts and nobody will believe.
MDT
Replied to Dr. Rakesh Goyal comment 6 years ago
Thanks Dr Goyal for pointing out the error. It is now rectified.

Regards,
MDT
Dr. Rakesh Goyal
Replied to Dr. Rakesh Goyal comment 6 years ago
Minor correction in the second line -
Rs. 92.95 crores = 9295000 crores
Read this as 92.95 lakh crores and not 92.95 crores.
MDT
Replied to Dr. Rakesh Goyal comment 6 years ago
Thanks Dr Goyal for pointing out the error. It is now rectified.

Regards,
MDT
Gopalakrishnan T V
6 years ago
The best way to stop generation of black money is to prevent convesrion of white money into black mostly resorted to by 95 % of the population because of the corrupt practices well designed by policy makers and practised by the implementors of policies. By andlarhge all transactions in real esate, gold and maintenance of real estates,transactions in trade and commerce involve corruption and bribe, evasion of all possible taxes knowingly that they result in black money generation, costly gifts on various occasions handed over to different officials, relatives and friends etc involve black money and tracking them is though a bit difficult iis definitely not impossible. The public have to be aware and they need to be sensitised.
Gopalakrishnan Krishnan
6 years ago
Black Money first gets generated in domestic market and transferred to International Market through official and unofficial channels.The generation of black money in the domestic market needs to be totally eliminated through enforcement of all existing laws of the land without fear or favour and this requires very strong will power on the part of the Government to plug all loopholes where black money generation is made possible.Real Estate transactions, High value transactions in cash involving gold, silver , and other Commodities etc are to be tracked intelligently with proper tie up of point of sales, cash transfers, tax collections and Income tax returns with the aid of Information Technology,social audit and independent verification of all transactions in a centralized data collection center. The guidance value fixed for land deals in various states are seldom scruinised and put through strictly is a ground reality and this can be easily detected if honestly verified. The guidance value and the market price have no relationship and the market value on real estate transactions are three to four times of the guidance value. This can be easily tracked and fixed if the autorities so desire. The loss of revenue to the state Government through Corrupt practices in real estate transactions is known to all states and efforts are not even attempted to detect and fix the problem. Forex transactions are liberalised and it becomes an easy route to transfer funds. Over invoicing and under invoicing of imports and exports and other forex transactions the genuineness of which is seldom verified or suspected even make the international movement of funds is easy. The black money malaise needs to be tackled culturally by educating the people involved in trade, commerce and making the law enforcement agencies accountable and responsible. The problem definitely is not insurmountable and there should be a willingness. Readiness is all that is required. Involve people and see that the target is easily met. 95% of the population will definitely not have black money. Only a few are having it and it can be controlled over a period.
Gurudutt Mundkur
Replied to Gopalakrishnan Krishnan comment 6 years ago
GK is 100% spot on!
Arish Sahani
6 years ago
Only people who Love india can save india Like Dr Swamy.
Subramani P K
6 years ago
Dr. Swamy should be member of all committees on legal, financial and other important wings of the government. His knowledge & expertise should be fully utilized for the benefit of the country & people. Black money, money stashed abroad, benami properties generation etc are major problems which have to dealt with utmost urgency. Legislation to prevent creation of black money in the deals like real estate etc, tax evasion, should be made very stringent with provision for imprisonment, confiscation with no concession of any kind for any. Strict implementation of the laws should be ensured through honest and dedicated officers with sufficient support from the ministry. Now is the time to talk less and act more. Jai Bharath
Suketu Shah
Replied to Subramani P K comment 6 years ago
100% correct,Dr Swamy is not only extremely knowledgable but also has the ability to find streesfree solutions(stress-free for the nation,not the people indulging in wrongdoings!) to most of India's problems since last 60 yrs. .Also imp is to put corrupt "unable to earn" CA behind bars who are the main catalysts into black money.The corrupt ca's are a small minority but they are the root behind this.
Nalin Patel
6 years ago
any money white or black or grey, moves in the direction of Maximum rate of Return, so if rate of return outside of india is higher the money will stay there , and vice versa. government policies decide on rate of return. in 60and 70 when smuggling was at peak, trains were stopped to load and unload gold, it was regular feature then train coming late. smuggling of watches was also at peak, then government declared if you out of black money factories are set up , then the crime was pardoned. one smuggler from gujarat sukhar had set up watch factory indo french time in mumbai, so one will have to follow rate of return path, how long will black money stay out side of india if there is no opportunity to earn more , west is flooded with stand still or decline. black money is prevalent in india, see gold is hoarded all the time.
tikku
6 years ago
After Gandhiji, and Sardar patel, Dr Swami is the person I regard and appreciate. Unfortunately, person like Swami is not considered fit to rule this nation, or I may say, present political fraternity will never let it happen. The reasons are known to all.
It is very much possible to end this black money charade if the Govt so desires. And why should our money cannot be brought back to us? And--why the holders are to be let off with just punishment and penalty? Institutions which are not cooperating could be named along with the list and photos of the holders displayed everywhere even on suspicion and let the matter be cleared later on.
There was time when we thought India will be good but now I have lost hope and so many others too have. There seems no hope of rescue any further. Unless----
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