Lok Sabha Question No. 2111 (UNSTARRED), answered on 2016-07-29
Subject: Black Money
Ministry: FINANCE
Asked by: ASHWINI KUMAR, JAYADEV GALLA, NAGARAJAN P.

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION No.†2111 TO BE ANSWERED ON FRIDAY, THE 29 TH  JULY, 2016

SHRAVANA 7, 1938 (SAKA)

## BLACK MONEY

## †2111. SHRI ASHWINI KUMAR: SHRI JAYADEV GALLA: SHRI P. NAGARAJAN:

## Will the Minister of FINANCE be pleased to state:

- (a) whether  volume  of  money  deposited  by  Indians  in  tax  heaven  countries  have  come  down during the recent times and if so, the details and reasons therefor;
- (b) whether the Government has reviewed the inquiry being done regarding the recovery of black money;
- (c) if so, the details thereof and if not, the reasons therefor; and
- (d) the progress of the inquiry in this case so far?

## ANSWER MINISTER OF STATE FOR FINANCE (SHRI SANTOSH KUMAR GANGWAR)

- (a) While there is no official estimation of money deposited by Indians in tax haven countries, recent media reports have quoted Zurich based Swiss National Bank as saying that money held by Indians in Swiss banks has fallen  by  nearly  one-third. These reports also say that  the funds, described by  Swiss National Bank as 'liabilities' of Swiss banks or  'amounts due to' their  clients,  are the official  figures disclosed by the Swiss authorities and do not indicate to the quantum of alleged black money held by Indians in Switzerland.
- (b)  &  (c):  Periodic  review  of  investigations  and  other  follow-up  actions  in  the  cases  involving  black money is an on-going process. The Income Tax Department (ITD) is entrusted with the responsibility of investigating  the  tax  evasion/black  money  cases  and  taking  follow  up  actions  such  as  assessment  of income,  levy  of  tax,  interest  &  penalty  and  filing  of  prosecution  complaints  before  Criminal  Courts, wherever applicable. Other law enforcement agencies such as Enforcement Directorate, Central Bureau of  Investigation,  etc.  also  take  action  under  laws  administered  by  them,  depending  upon  facts  of  each case. The taxes, penalties, etc. levied by the ITD form part of the total liability of each assessee and is recovered in accordance with law. There are provisions for recovery of the same from the assets kept abroad  also  in  accordance  with  legal  instruments  with  relevant  foreign  jurisdictions.  However,  as  per scheme of the Income-tax Act, 1961, only the demand/ liability raised in relation to the assessed total income is recoverable and not the undisclosed  income/black   money per-se . Recognizing the limitations

under the legislation [Income-tax Act, 1961, etc.] existing earlier, the Government  enacted  a comprehensive new law on black money - 'The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015' to specifically and more effectively tackle the issue of black money stashed away abroad. The new law has made the offence of wilful attempt to evade tax, etc. in relation to undisclosed foreign income and assets a Scheduled Offence under the Prevention of Money-laundering Act, 2002 (PMLA). This enables attachment and confiscation of the proceeds of crime of wilful attempt to  evade  such  tax,  etc.  i.e.  the  black  money  stashed  abroad,  eventually  leading  to  recovery  of  such undisclosed foreign income and assets/black money stashed abroad. Further, where property/proceeds of crime  is  taken  or  held  outside  the  country,  PMLA  has  been  amended  through  the  Finance  Act,  2015 enabling attachment and confiscation of property equivalent in value held within the country.

Besides the above, the Government has taken several other effective measures, both by way of policylevel initiatives as well as through more effective enforcement action on the ground, to address with the issue of black money. Recent such major initiatives of the Government include - (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former  Judges  of  Hon'ble  Supreme  Court,  (ii)  Introduction  of  the  Benami  Transactions  (Prohibition) Amendment Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia,  enable confiscation of Benami property and provide for prosecution, (iii)  Constitution of  MultiAgency Group (MAG) consisting of officers of Central Board of Direct Taxes (CBDT), Reserve Bank of India  (RBI),  Enforcement  Directorate  (ED)  and  Financial  Intelligence  Unit  (FIU)  for  investigation  of recent  revelations  in  Panama  paper  leaks,  (iv)  Proactively  engaging  with  foreign  governments  with  a view  to  facilitate  and  enhance  the  exchange  of  information  under  Double  Taxation  Avoidance Agreements  (DTAAs)/Tax  Information  Exchange  Agreements  (TIEAs)/Multilateral  Conventions,  (v) According high priority to the cases involving black money stashed away abroad for investigation and other  follow-up  actions  including  prosecutions  in  appropriate  cases,  (vi)  While  focusing  upon  nonintrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the  offenders  at  the  earliest  for  credible  deterrence  against  tax  evasion/black  money,  (vii)  Proactively furthering  global  efforts  to  combat  tax  evasion/black  money, inter  alia ,  by  joining  the  Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA), (viii) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India's treaty network by signing new DTAAs and TIEAs with many jurisdictions to facilitate the exchange of information and to bring transparency, (ix)  Initiation of the information technology based 'Project Insight' by the Income Tax Department for strengthening the non-intrusive  information  driven  approach  for  improving  tax  compliance  and  effective  utilization  of available information, (x) Legislative measures including amendments in the Income-tax Act, 1961.

(d) Appropriate  action  under  relevant  laws  in  the  cases  involving  black  money  is  an  on-going process.  As  submitted above, such action under direct taxes law includes searches, surveys, enquiries, assessment of income, levy of tax,  interest,  penalties,  etc.  and  filing  of  prosecution  complaints  before Criminal Courts, wherever applicable. In light of the above on-going process, investigation, assessment, penal actions, prosecutions, etc. in the cases involving black money are at different stages in different cases.

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