The much awaited ‘white paper on black money' was not a blockbuster or revealing document. But it did offer policy options that could be pursued by the Centre and the States to tackle the menace.
For investors, taxpayers and political parties, the white paper was a mixed bag. It certainly was a disappointment for those who expected the Government to give out numbers on the quantum of ill-gotten wealth stashed by Indians in foreign banks abroad.
There were no estimates on offer. The White Paper, however, identified certain sectors — real estate, finance, bullion and jewellery, equity trading, mining — as being prone to black money generation.
The over 100-page document also does not reveal names of Indians who have stashed black money abroad. But it does recommend certain controversial policy options such as suggesting that State governments levy agricultural income tax and asking SEBI to tighten reporting norms on Participatory Notes.
The white paper tabled in Lok Sabha today by the Finance Minister, Mr Pranab Mukherjee, highlights how corporate structures are misused to evade taxes and thereby generate black money. The Vodafone tax case provides an instance of the misuse of corporate structure for avoiding the payment of taxes, it notes.
It examines strategies that may need to be pursued for repatriating ill gotten funds stashed abroad. Many of the strategies come with riders, leaving scope for more debate rather than specifying the line of action.
VOLUNTARY DISCLOSURE SCHEMES
For instance, the white paper suggests a voluntary disclosure scheme can be a one-time option, in view of the increasing capacity of tax administration to access information from foreign jurisdiction. But the paper stresses the need to factor in the public sentiment against giving any immunity for tax evaders.
The same holds true for the gold deposit scheme that was suggested in certain quarters. The most important part of the scheme was complete tax immunity if the holders come forward to make the deposit and the depositors ought not to be asked for the gold's source. However, the white paper says the issue of complete tax immunity needs to be examined in the light of other policy objectives.
SWISS BANKS
For all those who still believe that much of the ill-gotten wealth is parked only in Swiss banks, there was some disappointment on the quantum disclosed. The white paper estimated of Indian account holders' deposits in Swiss banks at Rs 9,925 crore as of end December 2010, much lower than Rs 23,373 crore as of end 2006. Even this does not have a break-up of what is held legally.
The Opposition, especially the BJP, was unhappy that no information has been shared on what led to the decline in deposits between 2006 and 2010.
Some of the recommendations of the committee on black money headed by the CBDT Chairman form part of the white paper. All the recommendations of the black money panel form part of the annexure to the White Paper.