Budget ups the ante on black money stashed abroad

For the well-heeled, stashing unaccounted money abroad may not turn out to be a prudent strategy in the coming days so as to escape the clutches of Indian tax authorities.

Finance Minister Arun Jaitley’s first full fledged budget has outlined the multitude of legislative actions that the Modi-led Government intends to undertake to squarely deal with the problem of black money.

The problems of poverty and inequity cannot be eliminated unless generation of black money and its concealment is dealt with effectively and forcefully, Jaitley said in his budget speech.

He reiterated the BJP Government’s commitment to track down and bring back the wealth that legitimately belonged to the country.

On the anvil, Jaitley said, is a comprehensive new law on black money to specifically deal with money stashed away abroad.

Some of the key features of the proposed new law include amendment of the anti-money laundering law so as to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.

The offence of concealment of income or evasion of tax in relation to a foreign asset will be made a predicate offence under the Prevention of Money laundering law.

Post this, enforcement agencies will be able to attach and confiscate unaccounted assets and launch prosecution against persons indulging in laundering of black money.  

Concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with punishment of rigorous imprisonment upto ten years.

This offence will be made non-compoundable and penalty for such concealment of income and assets at the rate of 300 percent of tax would be levied, Jaitley said.

Also, the offenders will not be permitted to approach the Settlement Commission, he said.

FEMA LAW

Jaitley also said the foreign exchange management Act (FEMA) law will be amended to the effect that if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of this law, then action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India.  

Such contraventions will be liable for levy of penalty and prosecution with punishment of imprisonment upto  five years, he said.

BENAMI LAW

For curbing domestic black money, Jaitley announced that a new and more comprehensive Benami Transactions (prohibition) Bill will be introduced in the current session of Parliament.

This law will enable confiscation of benami property and provide for prosecution, Jaitley said.

EXPERTS TAKE

Daksha Baxi, Executive Director, Khaitan & Co, a law firm said, said the Finance Minister has announced intention of specifically providing legislative capability to deal with the money stashed away outside India.

“The list of penal provisions—prosecution, rigorous imprisonment as well as confiscation of Indian assets for offenders—looks a bit draconian”, She said.

It remains to be seen what exact legislation will be passed and how it will be implemented without being vindictive and whether any opportunity would be given to them for coming clean, Baxi added.  

Aseem Chawla, Partner, MPC Legal, a law firm, said the budget proposal does provide a clear intent on taking some serious, harsh measures against black money, especially in situations where monies are held outside India.

“What needs to be seen whether the same can be effectively applied and proper recourse can be taken by authorities once enacted in cases of stolen bank information”, Chawla told Business Line.

srivats.kr@thehindu.co.in

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