Unauthorised disclosure on black money hampers probe, says Arun Jaitley

Finance minister Arun Jaitley on Sunday said that disclosure of names of those with black money stashed in foreign bank accounts is not only unauthorised, but will violate the tax treaties and also hamper investigations to the benefit of the guilty.
“A disclosure in violation of tax treaties helps the account holder. The reciprocating state would treat this as a violation of a tax treaty and refuse to provide any evidence in support of the unauthorised account. The holder of the unauthorised account in the absence of any proof and confirmation from the reciprocating State would get the benefit in any investigation or prosecution,” the finance minister said in a post on his Facebook page, adding that a premature disclosure would also alert the account holder to prepare some documentation or even destroy evidence.
The finance minister explained that India was unable to participate in the recent multilateral pact on automatic exchange in Berlin since a prevalent view is that confidentiality clauses are unconstitutional in Indian law, adding that this needs to be reviewed.

Modi Government Catches a Break on Black Money Case

The Narendra Modi government today caught a break on the "black money" row as the Supreme Court said it was satisfied with steps taken by a Special Investigation Team to bring back illegal wealth stashed in foreign banks.

The previous Congress-led government had been repeatedly rapped for not doing enough to bring back black money.

The court today accepted the Special Investigation Team's first report and asked it to file another progress report after two months.

After taking charge in May, the BJP government, in one of its first acts, set up a probe team of 11 members to help identify Indians who have placed undeclared and untaxed income in Switzerland.  The team is headed by Justice MB Shah, a former Supreme Court judge.

Black money and alleged political patronage of tax defaulters was a recurring theme in the BJP's national election campaign.

The Supreme Court had in 2011 ordered that a committee that includes two retired judges be appointed to blueprint an agenda for how to bring back money from secret bank accounts abroad.

The Manmohan Singh government had resisted such a probe, alleging that a court-monitored investigation was unnecessary because agencies like the CBI and the Enforcement Directorate were handling the inquiry. That stand displeased the Supreme Court, which censured the government at a series of hearings. Source: http://www.ndtv.com/

Blackmoney: 'Warehouse' of tax data for I-T in the offing

As part of its vigour to track blackmoney in country's economic channels, the I-T department is creating a new "warehouse" of business related intelligence and funds data which will empower the taxman to check multiple trends of expenses made by individuals and entities.

The Income Tax department, which already has databases to undertake a 360-degree profiling of a person based on PAN card information or debit or credit card usage, has named the new project -- Data Warehousing and Business Intelligence (DWBI), which it plans to operationalise by next year.
The proposal to activate this powerful and state-of-the-art database and a host of other unique investigative tools was recently approved by the top brass of the I-T department and the Central Board of Direct Taxes (CBDT) during the annual conference of the Chief Commissioners and Directors General of I-T held in the national capital.

"The department is now scouting for a land and space for basing the project somewhere in north India. The new database will collate all electronic and manual intelligence and other information collected by the investigation and snoop wings of the department," a senior I-T officer said.
The DWBI project, according to a blueprint prepared by the CBDT, envisages to "streamline and enhance the non-intrusive surveillance capabilities of the I-T and for harnessing the potential of information being collected."
The warehouse will not only store and add to it information that the I-T database has till now like PAN card information, tax returns and a host of banking related information, it will also have the ability to generate information from the open source available on the Internet.
The I-T department, over the years, has decided to gradually move from regular search and survey operations to non-intrusive methods of data mining through electronic databases and information available through electronic portals of banking and other financial intermediaries.
The department, through this new data warehouse, has decided to bring on one platform the portals of both its investigation and criminal investigation units in an attempt to widen the tax base and check undisclosed income.
The I-T department already has a Integrated Taxpayer Data Management System (ITDMS) which keeps a track of the electronic spending of an individual, entity or a taxpayer.
Source : http://www.financialexpress.com/

Chasing black money, India gets Swiss invite

As India steps up pressure on Switzerland for details of alleged black money stashed there, Swiss authorities have invited Indian officials to Berne to discuss further cooperation in these matters.

Besides, Switzerland has already transmitted “few positive responses” to India, a spokesperson in Swiss finance ministry said, without divulging any further details on this.


Sources, however, said these “responses” may not be related to the Indian names figuring in the so-called ‘stolen lists’ of those having alleged Swiss bank accounts.

Switzerland has been refusing to share details on names obtained by Indian authorities through other countries, namely France and Germany, saying they figured in lists stolen by certain ex-employees of the concerned banks and no details can be shared on the basis of illegally-obtained information.
“As written to the Indian government, the Swiss government would like to welcome a delegation of administration officials from India to discuss the further cooperation in tax matters in Berne, after the talks in February 2014 in India,” a federal department of finance spokesperson said. He was replying to queries on steps being taken by Switzerland to address India’s concerns over denial of info about alleged black money stashed in Swiss banks.

Source : Financial Express

No Proposal for Legalisation of Black Money

The Government is not contemplating a proposal to legalise black money. Drive against tax evasion is an on-going process. Appropriate action under the direct tax laws including assessment of income, raising tax demand, levy of penalty and launching of prosecution in appropriate cases is taken whenever tax evasion is detected. Searches and surveys conducted under the Income-tax Act have led to detection of valuable evidence of large scale tax evasion which has been brought into tax.             The Government has taken various steps under a multi-pronged strategy to deal with the issue of black money which includes the following: Taking appropriate legislative measures such as reporting of assets (including bank accounts) kept outside the country. Setting up institutional mechanism to deal with money generated through unlawful acts. Setting up of a Special Investigation Team (SIT) to unearth black money stashed abroad. Jointing the global efforts to combat cross-border global tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of al uniform global standard on automatic exchange of information. Renegotiation of Double Taxation Avoidance Agreements (DTAAs) with other countries to bring the Article on Exchange of Information to International Standards, and expanding out treaty network by signing new DTAAs and by entering into Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions to facilitate the exchange of information and to bring transparency. Joining the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Effectively utilizing the information received from treaty partners to combat tax evasion and avoidance.

I-T Tweak could Plug Black Money Loophole

money market. Finance minister Arun Jaitley has tweaked an income tax rule with the aim of blocking a way of converting black money into white, tax consultants and chartered accountants said. The government proposes to tax any amount received as advance or earnest money for the sale of a capital asset, even if it is forfeited when negotiations fall through. Previously, sellers did not have to pay tax on the forfeited amount and people allegedly used this loophole to regularise unaccounted income. “The Finance Bill 2014 has now made this forfeited amount chargeable to tax under Section 56, thus making it an income and plugging this loophole,“ said Amit Maheshwari, partner at Ashok Maheshwary & Associates, a Gurgaon-based chartered accountancy firm.

“Now, it's not to be reduced from the cost of acquisition.“ The advance money will be taxed at 30%, tax experts said. Earlier, a person wanting to bring into books unaccounted money would enter into an agreement to sell his property , usually held for the long term, with an accommodating party on the understanding that whatever earnest money is paid by cheque or demand draft will be forfeited as per the terms of the agreement. In return, the accommodating party used to get a commission of 2-3% of the transaction value. The agreements were entered into without any intention of honouring them. The Finance Act of 2012 had curtailed the practice of receiving a very high premium against the issue of shares. “The amendment under Section 56 is expected to cap sham transactions being entered into to convert black money into white. Till now, forfeiture of advance against capital assets was mainly used to avoid payment of tax. Such a receipt was claimed as tax-free being capital receipts based on some judicial rulings and also taking resort to Section 51 of the Income-Tax Act,“ said Alok Gupta, director taxation at SS Kothari Mehta & Co. The amount forfeited was treated as a capital receipt not chargeable to tax and was reduced from the cost of acquisition of the property. Since these properties were held for the long term, any capital gains arising from the sale could be avoided by claiming exemption under Section 54. A new clause (ix) has been inserted in Section 56(2) of the IT Act, which will make the advance money taxable in the year in which the negotiations failed. This will come into effect from April 1, 2015. Transactions already entered from April 1, 2014, to date will also be covered. “Post-amendment, if the transaction falls through, the amount forfeited will be taxed as income from other sources and taxed at the rate of 30%,“ said tax expert AK Doshi of Doshi, Chatterjee, Bagri & Co. “The government is expected to gain to the extent of 10% being the difference between tax rate on income from other sources (30%) and on capital gains (20%).“ –

Source : www.economictimes.indiatimes.com

Govt detected Rs 1 lakh crore undisclosed income in FY14

The government has informed the special investigation team looking into black money that undisclosed income of more than Rs 1 lakh crore was detected through searches and surveys in 2013-14, a part of which accounts for certain transfer pricing adjustments relating to past years.

The income tax department detected over R90,000 crore in surveys and R10,792 crore in searches last fiscal. Nearly a third of this could actually be the tax liability if assessees could not satisfactorily explain why the detected amounts were not reported as income. In FY13, searches and surveys had led to detecting an undisclosed income of about R30,000 crore.

The tax department has asked all field officers to refer to the detailed inputs given by the Centralised Processing Centre (TDS) on businesses that either do not deduct tax at source on the payments they make or deduct less than the required amount and hold spot verifications including survey.

The tax department, which has to meet a 19% growth target in revenue collection this fiscal, has already made an action plan to recover past dues, which would be discussed at a conference of chief commissioners in the fourth week of this month.

Sources said that recovery of about Rs 42,000 crore in tax arrears, enhancing the share of tax deducted at source (TDS) in the total revenue receipts and casting the net wide to cover 22 lakh more individuals who make high-value payments but do not file tax returns are part of the agenda.

Intense scrutiny on the revenue recognition practices of real estate companies as well as on the weighted deductions claimed by companies on their research and development spending are also high on the department’s priority.

The tax administration also intends to approach nearly 89 countries with which India has double tax avoidance agreements and another 16 nations with which it has tax information exchange deals to verify the source of income and other details of entities that make payments to businesses in India if their transactions are suspected of attempted tax evasion.

Source : www.financialexpress.com