The Associated Chambers of Commerce and Industry of India
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Black money worth about $2 trillion stashed abroad: ASSOCHAM Friday, June 20, 2014
Govt. should offer six–month Amnesty scheme to bring back black money
Estimating that about $2 trillion black money from India is stashed overseas, ASSOCHAM Direct Taxes Council chairperson, Mr Ved Jain suggested the new government to come out with a six-month amnesty scheme that will facilitate transfer of such funds back home on voluntary basis with payment of 40 per cent tax.
Supporting efforts of the new Government to find legal ways to bring black money stashed abroad to India, ASSOCHAM has submitted proposal to the new government in this behalf, informed Mr Jain.
“The proposal will also be sent to the Special Investigation Team (SIT) formed at the behest of the Supreme Court which has already begun its deliberations,” said ASSOCHAM Senior Vice President, Mr Sunil Kanoria while releasing a paper on Black Money along with Mr. Jain, Mr. R.K. Handoo, Chairman, Legal Affairs Council of ASSOCHAM and Secretary General Mr. D.S. Rawat.
The chamber which is committed to encouraging clean business ethics and transparency in public policy had commissioned a Theme Paper on the subject ‘Black Money Menace in India’ to an expert group in the Chamber and recommended practical solutions to get these mammoth funds back into the official channels and contribute to the national building.
“The amnesty scheme limited to six months suggests a 40 per cent tax on voluntarily disclosed funds topped with a ten per cent investment of the total money brought back in infrastructure bonds. The 40 per cent tax deduction is ten per cent above the maximum effective tax on income and would dissuade misuse of the scheme for turning internal black money into white through a transfer mechanism”.
According to the paper, the government should not use the revenue for bridging its budget deficit but channel it to specific projects of larger benefit including infrastructure development.
An integral part of this strategy is the total transparency in political funding with the election expense ceiling off, a real time disclosure of all sources of funds and expenses out of them and a partial funding of election expenses for all serious candidates and parties under a national compact among all stakeholders.
There is also a need to introduce uniform stamp duty rate applicable across the country. ASSOCHAM is of the view that a stamp duty rate of three per cent (3 per cent) is fair and reasonable rate. To curb under reporting further, the organization has also underlined the need in cases of repurchase of property, for “benefit of allowing credit of the stamp duty paid at the time of the purchase.”
To further reduce the temptation for underreporting of purchase price paid, ASSOCHAM also wants the circle rate to be notified every year on the basis of the data input for the preceding year so as to make sure that the circle rates are as good as the prevalent market rate.
Taking into consideration that a new land acquisition law has now come into force and bulk purchasers of agricultural land have to pay higher prices on record to take care of rehabilitation of the users also, the higher price paid by real estate business would inevitably be reflected in the resale of developed property. If steps are not taken to rationalise stamp duty and other commitments to the various government authorities the pressure under reporting would only be even more than before the new law came into force.
“Reduction in the stamp duty rate with credit of the stamp duty paid at the time of the (earlier) purchase will not have any impact on the revenue collection of state governments and will go a long way in curbing the menace of black money.”
On the possible benefits of a well devised amnesty that does not encourage tax evasion and makes the offender pay for his wrong doing, ASSOCHAM paper has pointed out that in the United States more than 14,700 tax payers took advantages of such a scheme in that country and made a voluntary disclosure. Similar move in Germany saw 20,000 taxpayers make a voluntary disclosure giving government there about 4 billion Euros in additional revenues.
According to various studies that the ASSOCHAM has quoted, the Indian wealth so held abroad illegally varied from Rs 600 crores in 1953-54 ( or 0.6 per cent of then GDP) to Rs 60,000 crores per year , the estimate given by the Indian Institute of Finance. A credible estimate is difficult to establish. This menace of black money afflicts other countries also including highly developed economies like the US.
Referring to another related problem of Havala, the paper noted that with a burgeoning number of Indians working abroad and sending money home, the illegal and parallel transactions have also become as much a danger as smuggling and a means of siphoning off dollars that should come to the legal system of the country instead of being diverted into illegal accounts held abroad.
“India is the world’s largest consumer of gold in the world and that there is a general preference among middle class across the country for keeping their savings in gold has its own implications for any attempt to cub black money. As in exchange rate gaps, the aligning of laws and rules with market realities would help tendency to get gold at any price. There has also to be massive efforts at educating families to hold savings in credible and legal financial instruments that are safe”.
While restrictions introduced by Indian government on gold and diamond imports have reduced dollar demand for gold imports, the measures have also made smuggling of these items profitable to those engaged in such illegalities. It also led to legitimate business of gems and jewellary, a huge foreign exchange earner for the country, affected badly and thereby threatening foreign exchange earnings of the country.
Estimating that about $2 trillion black money from India is stashed overseas, ASSOCHAM Direct Taxes Council chairperson, Mr Ved Jain suggested the new government to come out with a six-month amnesty scheme that will facilitate transfer of such funds back home on voluntary basis with payment of 40 per cent tax.
Supporting efforts of the new Government to find legal ways to bring black money stashed abroad to India, ASSOCHAM has submitted proposal to the new government in this behalf, informed Mr Jain.
“The proposal will also be sent to the Special Investigation Team (SIT) formed at the behest of the Supreme Court which has already begun its deliberations,” said ASSOCHAM Senior Vice President, Mr Sunil Kanoria while releasing a paper on Black Money along with Mr. Jain, Mr. R.K. Handoo, Chairman, Legal Affairs Council of ASSOCHAM and Secretary General Mr. D.S. Rawat.
The chamber which is committed to encouraging clean business ethics and transparency in public policy had commissioned a Theme Paper on the subject ‘Black Money Menace in India’ to an expert group in the Chamber and recommended practical solutions to get these mammoth funds back into the official channels and contribute to the national building.
“The amnesty scheme limited to six months suggests a 40 per cent tax on voluntarily disclosed funds topped with a ten per cent investment of the total money brought back in infrastructure bonds. The 40 per cent tax deduction is ten per cent above the maximum effective tax on income and would dissuade misuse of the scheme for turning internal black money into white through a transfer mechanism”.
According to the paper, the government should not use the revenue for bridging its budget deficit but channel it to specific projects of larger benefit including infrastructure development.
An integral part of this strategy is the total transparency in political funding with the election expense ceiling off, a real time disclosure of all sources of funds and expenses out of them and a partial funding of election expenses for all serious candidates and parties under a national compact among all stakeholders.
There is also a need to introduce uniform stamp duty rate applicable across the country. ASSOCHAM is of the view that a stamp duty rate of three per cent (3 per cent) is fair and reasonable rate. To curb under reporting further, the organization has also underlined the need in cases of repurchase of property, for “benefit of allowing credit of the stamp duty paid at the time of the purchase.”
To further reduce the temptation for underreporting of purchase price paid, ASSOCHAM also wants the circle rate to be notified every year on the basis of the data input for the preceding year so as to make sure that the circle rates are as good as the prevalent market rate.
Taking into consideration that a new land acquisition law has now come into force and bulk purchasers of agricultural land have to pay higher prices on record to take care of rehabilitation of the users also, the higher price paid by real estate business would inevitably be reflected in the resale of developed property. If steps are not taken to rationalise stamp duty and other commitments to the various government authorities the pressure under reporting would only be even more than before the new law came into force.
“Reduction in the stamp duty rate with credit of the stamp duty paid at the time of the (earlier) purchase will not have any impact on the revenue collection of state governments and will go a long way in curbing the menace of black money.”
On the possible benefits of a well devised amnesty that does not encourage tax evasion and makes the offender pay for his wrong doing, ASSOCHAM paper has pointed out that in the United States more than 14,700 tax payers took advantages of such a scheme in that country and made a voluntary disclosure. Similar move in Germany saw 20,000 taxpayers make a voluntary disclosure giving government there about 4 billion Euros in additional revenues.
According to various studies that the ASSOCHAM has quoted, the Indian wealth so held abroad illegally varied from Rs 600 crores in 1953-54 ( or 0.6 per cent of then GDP) to Rs 60,000 crores per year , the estimate given by the Indian Institute of Finance. A credible estimate is difficult to establish. This menace of black money afflicts other countries also including highly developed economies like the US.
Referring to another related problem of Havala, the paper noted that with a burgeoning number of Indians working abroad and sending money home, the illegal and parallel transactions have also become as much a danger as smuggling and a means of siphoning off dollars that should come to the legal system of the country instead of being diverted into illegal accounts held abroad.
“India is the world’s largest consumer of gold in the world and that there is a general preference among middle class across the country for keeping their savings in gold has its own implications for any attempt to cub black money. As in exchange rate gaps, the aligning of laws and rules with market realities would help tendency to get gold at any price. There has also to be massive efforts at educating families to hold savings in credible and legal financial instruments that are safe”.
While restrictions introduced by Indian government on gold and diamond imports have reduced dollar demand for gold imports, the measures have also made smuggling of these items profitable to those engaged in such illegalities. It also led to legitimate business of gems and jewellary, a huge foreign exchange earner for the country, affected badly and thereby threatening foreign exchange earnings of the country.
http://www.assocham.org/prels/shownews.php?id=4555
Published: June 20, 2014 17:07 IST | Updated: June 20, 2014 17:08 IST
Two big Swiss banks have two-thirds of all money of Indians
APA file picture of a building of the UBS bank in Zurich, Switzerland.
It is just two big banks - UBS and Credit Suisse - which appear to be accounting for almost two-third of the total money held by Indians in Swiss banking system, known for their famed secrecy walls.
According to the latest official data disclosed by Switzerland’s central banking authority SNB (Swiss National Bank), Indians’ money in Swiss banks rose by 43 per cent last year to 2.03 billion Swiss francs (nearly Rs 14,000 crore), despite growing global pressure on Switzerland to share client details of their banks.
A further analysis of SNB data shows that the ‘big banks’ account for 68.2 per cent or about 1.4 billion Swiss francs (close to Rs 10,000 crore) of the total money belonging to the Indian clients of Swiss banks.
There are a total of 283 banks in Switzerland, out of which only two - UBS and Credit Suisse - have been classified as ‘big banks’ by Zurich-based SNB. There are also 93 foreign-controlled banks operating in the country.
However, the amount held by Indian clients in ‘savings and deposit accounts’ of Swiss banks is comparatively less at about 63 million Swiss francs (less than Rs 500 crore) and account for just about three per cent of the total exposure of Indians to the Swiss banking system.
Swiss banks classify a major portion of their clients’ money as “other amounts due to customers” and such funds due to their Indian clients stand at nearly 1.6 billion Swiss francs (over Rs 11,000 crore).
The ‘other’ avenues through which clients park their funds with Swiss banks include “trading portfolios, financial investments and participating interests”. Besides, banks are also said to be promoting ‘precious metals’ among their clients for parking their funds.
A small portion of clients’ money is also held by Swiss banks through other banks in the foreign countries. For Indian clients, such funds stood at about 94 million Swiss francs (about Rs 650 crore) at the end of 2013.
The total Indian money held in Swiss banks includes 1.95 billion Swiss francs held directly by Indian individuals and entities, and another 77.3 million Swiss francs through ’fiduciaries’ or wealth managers at the end of 2013.
The latest data from Zurich-based SNB comes at a time when Switzerland is facing growing pressure from India and many other countries to share foreign client details, while its own lawmakers are resisting such measures.
India has also constituted a Special Investigation Team (SIT) to probe cases of alleged black money of Indians, including funds stashed abroad in places like Switzerland.
http://www.thehindu.com/business/Economy/two-big-swiss-banks-have-twothirds-of-all-money-of-indians/article6133667.ece?css=print
Why do black money offenders need amnesty?
Lok sabha Elections 2014 - admin
A new study by Assocham puts the amount of black money stashed abroad at a whopping $2 trillion (Rs. 120 lakh crore), more than India’s nominal GDP of $1.9 trillion (Rs. 114 lakh crore) in 2013-14.
There is no official estimate of black money generated so far in India. Assocham’s numbers are higher than various other earlier estimates, ranging between $ 500 billion to $ 1.4 trillion.
The UPA government had commissioned a study in March 2011 for assessing the amount of black money in India and outside the country. Slated to be finished within 18 months, it’s still to be completed.
The new BJP-led NDA government had formed a Special Investigation Team (SIT) on its first day itself to dig out and bring back money black from abroad to India. While supporting the Indian Government’s idea of ‘legally’ unearthing black money hideouts abroad, the country’s premier business body has offered a set of solutions to tackle the issue.
While the estimate of $2 trillion is termed ‘based on assumptions and unverifiable’, having been arrived at on basis of studies undertaken on various other reports, it still goes to underline the gravity of this issue.
Ways and means to recover black money
Mr Ved Jain, the chairperson of ASSOCHAM Direct Taxes Council, has suggested that the new government should declare a short-term amnesty scheme to facilitate voluntary transfer of hidden money back home by paying 40 percent tax. The chamber had done its own accounting and analysis of the menace that plagues India to bring back the precious funds that can contribute to the task of nation-building. What are its suggestions and ideas?
Mr Ved Jain, the chairperson of ASSOCHAM Direct Taxes Council, has suggested that the new government should declare a short-term amnesty scheme to facilitate voluntary transfer of hidden money back home by paying 40 percent tax. The chamber had done its own accounting and analysis of the menace that plagues India to bring back the precious funds that can contribute to the task of nation-building. What are its suggestions and ideas?
- The amnesty limited to six months includes a 40 percent tax on voluntarily disclosed funds topped with a further 10 ten percent investment of the total money brought back in infrastructure bonds. The tax deduction is 10 percent above the maximum effective tax on income and would dissuade misuse of the scheme for turning internal black money into white through a transfer mechanism.
- The government should not though, use the revenue generated to bridge its budget deficit. It should be channelized into infrastructure development projects.
- It should be ensured that there is total transparency in political funding with the election expense ceiling off, a real-time disclosure of all sources of funds and expenses.
- Uniform stamp duty rates should be introduced across the country. A stamp duty rate of three percent is fair. To curb under-reporting, there is need for reduction in the stamp duty rate with credit of the stamp duty paid at the time of the (earlier) purchase. This will go a long way in checking the generation of black money in the system. The circle rate should be rationally modified on yearly basis.
- On the possible benefits of a well devised amnesty that does not encourage tax evasion and makes the offender pay for his wrong doing, ASSOCHAM estimates that the Indian wealth held illegally abroad varies from Rs 600 crores in 1953-54 (0.6 percent of then GDP) to Rs 60,000 crores per year, the estimate given by the Indian Institute of Finance.
- With a large number of Indians working abroad and sending money home, the illegal and parallel transactions have become as much a danger as smuggling and a means of siphoning off dollars that should come to the legal system of the country instead of being diverted into illegal accounts held abroad.
- India is the world’s largest consumer of gold in the world and that there is a general preference among middle class across the country for keeping their savings in gold has its own implications for any attempt to cub black money. As in exchange rate gaps, the aligning of laws and rules with market realities would help tendency to get gold at any price.
The central government had recovered about Rs. 10,000 crore in 1997 through the then Voluntary Disclosure of Income Scheme (VDIS). It sparked a controversy and opposition. The government had to give an undertaking to the SC that the scheme was the first and also last of its kind. R K Handoo of Assocham’s Legal Affairs Council, stated that the government could move the Supreme Court and come up with an Executive Order to launch the amnesty scheme.
Lastly, ASSOCHAM emphasizes that Indian families need to be oriented about the importance of saving via credible, safe and legal financial instruments.
Offer six-month amnesty to bring back black money, Assocham tells Govt
Suggests 40% tax on money brought back to India
New Delhi, June 20:
Industry body Assocham on Friday suggested a six-month amnesty scheme to bring back black money stashed abroad.
Proposing a multi-pronged strategy to curb the menace of unaccounted money and get back to India a significant portion of black money stashed abroad, the chamber also suggested a 40 per cent tax on all money offered under the amnesty scheme.
An additional 10 per cent levy could be imposed on the total money brought back and then be parked in infrastructure bonds, it said.
“In all, as much as 50 per cent of funds brought back could be taken away by the Government. Out of this, 10 per cent can be returned to the declarant at the expiry of the tenure of infrastructure bonds,” said Ved Jain, Chairperson of National Council for Direct Taxes. Assocham, which on Friday released its recommendations to tackle the menace of unaccounted money in India, has put the estimate of black money stashed abroad at $2 trillion. The level of black money estimated is almost the same as India’s gross domestic product.
RK Handoo, who heads Assocham’s legal affairs committee, said the amnesty scheme has worked well for several countries in the recent past.
“As this effort has worked for other countries, it is feasible and will be a pragmatic step for India to launch an amnesty scheme,” he said.
Amnesty schemes
He also felt that the assurance given by the Government to the Supreme Court in late nineties that no further amnesty schemes will be launched can always be modified.
He also felt that the assurance given by the Government to the Supreme Court in late nineties that no further amnesty schemes will be launched can always be modified.
“If the new Government takes a stand that an amnesty scheme should be offered, it can always go to the Supreme Court and seek its clearance,” Handoo said.
Assocham has also pitched for uniform stamp duty of 3 per cent on real estate transactions across the country.
(This article was published on June 20, 2014)
http://www.thehindubusinessline.com/economy/offer-sixmonth-amnesty-scheme-to-bring-back-black-money-stashed-abroad-assocham/article6133699.ece?ref=sliderNews