M A I N   N E W S

Money stashed in banks abroad
Pranab rules out revealing names of beneficiaries
Faraz Ahmad
Tribune News Service

Measures taken to curb black money Joined the task force on Financial Integrity and Economic Development; Joined as the 34th member of Financial Action Task Force (FATF) on June 25, 2010, to help build the capacity to fight terrorism and trace terror funds; Joined Eurasian Group (EAG) responsible for enforcing global standards on anti-money laundering (AML)

Creating an appropriate legislative framework 1. India has Double Taxation Avoidance Agreements (DTAAs) with 79 countries. Needs modifications in DTAAS with 74 others . 2. Letters issued to 65 countries (between April and November, 2009) to 65 countries for initiating negotiations to modify the relevant article in DTAAs. Ongoing negotiations with nine countries put on fast track 3. DTAA with Switzerland was signed on August 30, 2010 and is now before Swiss Parliament for approval.

New Delhi, January 25
The government has detected mispricing of Rs 33,784 crore in last 18 months even as the national exchequer managed to mop up a sum of Rs 34,601 crore in its efforts to curb and detect black money in the country, said Union Finance Minister Pranab Mukherjee here today.

He, however, categorically ruled out giving names of those received from foreign banks, “Because of legal framework,” adding, “No sovereign country is going to share information unless there is a legal framework.”

Giving details of the measures adopted by his UPA Government Mukherjee said, “The early results of our initiatives are encouraging. These proactive steps led to additional collection of taxes of Rs. 34,601 crore and detection of additional income of Rs 48,784 crore on which taxes are being collected.”

The Finance Minister, offering a belated response to the BJP campaign, debunked these saying, “So far there are no reliable estimates of black money both inside and outside the country. The interim recommendations of BJP Task Force, 2009 have estimated the amount of black money to be $ 500 billion to 1400 billion. A current study by Global Financial Integrity has estimated the present value of illicit money outflow to be $ 462 billion

Mukherjee, however, added, “All these estimates are based on various unverifiable assumptions and approximations. The government has been seized of the matter and has constituted a multi disciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens.”

He said, “The government has formulated a five-pronged strategy which consists of joining the global crusade against ‘black money’; creating an appropriate legislative framework; setting up institutions for dealing with illicit funds; developing systems for implementation and imparting skills to the manpower for effective action.”

He claimed, “India has completed negotiations of 10 new information Exchange Agreements with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco Saint Kitts and Nevis, Argentina and Marshal Islands out of 22 identified countries/ jurisdictions.”

He added, “India has initiated process of negotiation with 65 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information regarding tax payers not covered by DTAA.” He said, “As on date, negotiations have been completed with 10 existing DTAA countries to update this Article. Thirteen new DTAAs have also been finalised where the Exchange Information Article is in line with the international standards. In short negotiations/ renegotiations of DTAAs with 23 countries have been completed.

The Finance Minister also claimed that, “Information regarding details of payments received by Indian citizens in several countries has started coming in from treaty partners. This information is in different stages of processing and investigations,” he said adding, “We have detected undisclosed income of about Rs 15,000 crores in last 18 months due to focused search operations by income tax department.

On the question of disclosing the names of those on whom the government has obtained information about stashing money abroad, the minister said, “There is no question of hiding behind Double Taxation Act. No sovereign country is going to give us information unless we have the legal framework in place.

The minister also explained that the changed global economic conditions have contributed in a big way in putting in place legal framework to curb black money and said a lot of black money is generated due to under pricing or over pricing.

He said, At G-20 Finance Ministers’ meeting held in London on September 4-5, 2009, and the Pittsburg Summit on September 24-25, 2009, India played an active role in finalising the declarations which included delivering an effective programme of per review, capacity building and counter measures to tackle non-cooperative jurisdictions that fail to meet regulatory standards. As a result, all the tax havens have now agreed to end the bank secrecy.