Curbing black money: Panel moots criminal trials for economic offences

Shishir Sinha New Delhi | Updated on August 14, 2012 Published on August 14, 2012

The Finance Ministry appointed committee on black money has called for expediting the setting up of Lok Pal and Lokayukta.

At the same time, the committee has recommended criminal trial for economic offences, stricter provisions for participatory notes (PN), limiting the fiscal incentives for buying house and revising custom duty on gold and specialised judicial service besides others.

The committee, under the chairmanship of then Central Board of Direct Taxes’ (CBDT) Chief Laxman Das, submitted its report in March. However, it has been made public only now.

The committee was disappointed with industry associations’ participation in the preparation of the report.

It said, “The response of trade and industry bodies to the request for suggestions has not been very encouraging. Only FICCI and Assocham responded.”

The committee has divided the strategy to tackle black money into five categories. These include prevention, discouragement, effective detection, effective investigation and adjudications. However, it has not talked about any new legislation.

It feels, “While there may not be any need to have a new law to especially deal with black money and black economy, various existing laws need to be comprehensively reviewed by the concerned administrative ministries on a regular basis keeping in view the changing economic scenario, and provisions dealing with violations need to be strengthened accordingly.”

Effective Detection

The committee has recommended, “Institutions of the Lok Pal and Lokayukta may be put in place at the earliest, in the Centre and States, respectively, to expedite investigations into cases of corruption and bring the guilty to justice”. The Lok Pal Bill is under consideration of Parliament while some States have set up Lokayukta.

The committee also talks about Indian tax residents having substantial monetary transactions through foreign entities (with business in India) or their branches abroad.

Here it recommended, “India may also insist on entities operating in India to report all global transactions above a threshold limit. For this purpose, appropriate law, rules or contractual/licensing arrangement with these entities may be framed and implemented.”

On participatory notes (PN), the committee said, “PN subscribers should be subject to KYC norms of either the home country or the host country whichever is stricter. Though such provision implicitly exists in the extant provisions, these need to be built into SEBI regulations explicitly for better compliance.”

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Published on August 14, 2012
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