{"id":3529,"date":"2015-05-20T18:37:46","date_gmt":"2015-05-20T13:07:46","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=3529"},"modified":"2015-05-20T18:37:46","modified_gmt":"2015-05-20T13:07:46","slug":"now-a-govt-red-carpet-for-those-who-have-black-money-hidden-abroad","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2015\/05\/20\/now-a-govt-red-carpet-for-those-who-have-black-money-hidden-abroad\/","title":{"rendered":"Now a govt red carpet for those who have black money hidden abroad"},"content":{"rendered":"

\"rupee\"<\/a>
\nLast week the Parliament passed the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015. This Bill up until now was referred to as the foreign black money Bill. Now it has become an Act.
\nThe Act allows the government to tax those who have undisclosed foreign income and assets at the rate of 30%. No exemptions or deductions as per the Income-Tax Act 1961 will be allowed. Over and above a tax of 30%, there will also be a penalty of three times the amount of tax.
\nHowever, the government plans to offer a compliance window. This window will allow those with undisclosed foreign assets and income to declare them, pay a tax of 30% and a penalty of 30% and not face any prosecution.
\nIn fact, <\/span><\/span><\/span>The Economic Times reported <\/span><\/span><\/span><\/span><\/span><\/a>on May 18, 2015 that: \u201cThe income-tax department is likely to set up two centres, in Delhi and Mumbai, to process claims from those with dodgy overseas wealth to declare.\u201d
\nThe cells in Mumbai and Delhi will be manned by senior tax officials whose job will be to ensure that those who come out and declare their undisclosed foreign income and assets are not harassed. It is being suggested that individuals will be allowed a period of two months to declare their undisclosed foreign income and assets and up to a period of six months to pay the tax on it.
\nIn simple English, what this means is that the government is essentially laying out a red carpet for those who haven’t paid income tax on the money that they have earned over the years, created black money and managed to divert that money out of the country.
\nThe ministry of finance 2012 white paper on black money defines black money as: \u201cany income on which the taxes imposed by government or public authorities have not been paid.\u201d
\nThe wealth that has been accumulated in this way \u201cmay consist of income generated from legitimate activities or activities which are illegitimate per se, like smuggling, illicit trade in banned substances, counterfeit currency, arms trafficking, terrorism, and corruption,\u201d the white paper goes on to suggest.
\nOf course this wealth that has been accumulated through tax evasion has \u201cneither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession.\u201d
\nAnd it is these people who will now be welcomed with open arms by the government. The justification offered will be that \u201cbut, we are fining them 30% over and above the 30% tax\u201d. Yes, but how does this decision make look the minuscule portion of Indians who have been paying their income-tax honestly over the years.
\nThe <\/span><\/span><\/span>annual report of the ministry of finance<\/span><\/span><\/span><\/span><\/span><\/a> points out that in a country with a population of more than 120 crore, the number of income tax assessees in the 2013-2014 stood at a mere 4.7 crore. And by laying out the red carpet for the tax cheats, what message is the government sending out to the 4.7 crore individuals who have been paying their taxes? This is not the best way to go about trying to increase the number of people who pay income tax. In fact, the annual report of the ministry of finance points out that between April and December 2014, just 24.35 lakh fresh assessees were added. The point being that the rate of growth of tax compliance is anyway very slow and on top of that if the government keeps welcoming those who have black money, what future does tax compliance really have in this country?
\nInstead of welcoming the tax cheats, the government should be naming and shaming them. Steve Levitt and Stephen Dubner make this suggestion in an American context in their new book <\/span><\/span><\/span>When to Rob a Bank…And 131 More Warped Suggestions And Well Intended Rants: <\/i><\/span><\/span><\/span>\u201cMaybe it’s time…to launch a War on Tax Cheats. What if they could demonize the tax cheats so thoroughly, emphasizing that the \u201ctax gap\u201d (the difference between taxes owed and money collected) is about the size of the federal deficit…Maybe they could put pictures of tax cheats on milk cartons, on flyers at the post office, even on <\/span><\/span><\/span>America’s Most Wanted<\/i><\/span><\/span><\/span>.\u201d Why can’t something along similar lines be tried in India, instead of bailing out the tax cheats?
\nFurther, between April and November 2014, the income-tax department seized assets worth Rs 538.23 crore only. This is hardly anything given the huge amount of black money floating around in the country. And given this, the government should be concentrating its resources in unearthing black money in the country, instead of welcoming those who have accumulated black money over the years.<\/p>\n

The column originally appeared on The Daily Reckoning <\/a>on May 20, 2015 <\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Last week the Parliament passed the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015. This Bill up until now was referred to as the foreign black money Bill. Now it has become an Act. The Act allows the government to tax those who have undisclosed foreign income and assets at the rate … <\/p>\n

Analysis<\/a> Equitymaster<\/a>","qubely_excerpt":"Last week the Parliament passed the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015. This Bill up until now was referred to as the foreign black money Bill. Now it has become an Act. The Act allows the government to tax those who have undisclosed foreign income and assets at the rate…","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3529"}],"collection":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/comments?post=3529"}],"version-history":[{"count":0,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3529\/revisions"}],"wp:attachment":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/media?parent=3529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/categories?post=3529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/tags?post=3529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}