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On the issue of unaccounted money lying abroad, the Finance Minister indicated a five-pronged strategy to deal with the issue of generation and circulation of black money. While some of the initiatives have already been implemented, the remaining are expected to be place in due course.
Contrary to the expectations of India Inc of the Government announcing an amnesty scheme for unaccounted money, no amnesty was rolled outInstead, the Government proposes to address this issue by introducing anti-avoidance provisions in respect of transactions with persons located in countries or jurisdictions (to be notified) which do not effectively exchange information with India.
These provisions seek to bring such transactions within the transfer pricing ambit and require maintenance of specified documents and information in order to claim the deduction. Further, it is proposed that such transactions would be subject to withholding tax at the higher of the rates specified in the Income-Tax Act or rates in force or 30 per cent. Though the introduction of above provisions is likely to bring more transparency to the transactions with notified tax jurisdictions, it is unclear to what extent these would facilitate bringing back the unaccounted money.
(The authors are Partner and Director respectively of Walker Chandiok & Co)
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