Not all money stashed in foreign accounts is ‘black’

All money in foreign accounts is not black, as some of it could very well have been legitimately used for various transactions. Besides, tax treaties with various countries do not restrict disclosures on illegal foreign accounts. “Under double taxation avoidance agreements (DTAA) money is coming through legal channels. But, if there is some money that has moved from one point to another without the Government being able to track it, then it has nothing to do with DTAA at all,” a senior Government official said.

On demands for disclosing the names of such account holders, Finance Minister Arun Jaitley had earlier said that any premature and out-of-court disclosure of names would violate DTAAs with other countries. He, however, later clarified that India’s DTAA with Germany only prevented it from disclosing names to the media.

“There are safeguards in treaty provisions with respect to sharing of information on confidentiality, secrecy etc. This applies to information sharing between competent authorities — the Department of Revenue in the case of India. Now that the Government has shared the information, the ball is in the Special Investigation Team’s court,” said Mukesh Butani, Managing Partner, BMR Legal.

In March 2009, lawyer Ram Jethmalani had filed a public interest litigation seeking judicial intervention to bring back $11 billion of black money allegedly stashed in foreign banks by Indians. According to various estimates, between $2 billion and $2 trillion has been put away by Indians in foreign accounts.

The CBI estimates that $500 billion (₹24.5 lakh crore) of illegal money has been deposited by Indians in tax havens abroad.

Although the Government has submitted a list of 627 black money account holders, the names in the list contain entries only till 2006. The Special Investigation Team will continue to probe the foreign bank account holders’ list in accordance with the Supreme Court’s orders. A deadline of March 2015 has been set for concluding the investigations.

“The limit on foreign exchange outflow is almost non-existent now. If a person takes money out after paying all taxes and deposits it in a foreign account, it is not illegal. Transactions can take place in some countries by picking up a phone, whereas it may take several days in India,” said Biswajit Dhar, a trade expert and a Professor at Jawaharlal Nehru University.

The Government has been taking steps to extract information from other countries like Switzerland on those identified with illegal transactions.

Switzerland has indicated its willingness to provide information in cases where investigations have been carried out by India’s I-T Department independent of what the Swiss Government considers stolen data.

With inputs from Shishir Sinha and Richa Mishra

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