JOIN USThe introduction of a new bill to recover black money held abroad by Indians is in accordance with the promises made by the BJP and Prime Minister Narendra Modi before the elections. The deadline set for bringing money back has passed and the government’s actions on cases before it were not effective. It gave the same excuses as given by the previous government for its failure to take action. The bill that has now been introduced may also not be considered the best. But any attempt to address the problem of black money, which is cancer to the economy, can only be welcomed. When it is estimated that black money, including that secreted out of the country and circulating within the country, may make up 50 per cent of the GDP, the case for action is self-evident. The question is whether the new legislation will be able to recover the hidden hoards.
The bill gives a one-time compliance opportunity for a month for individuals to declare their unaccounted wealth kept abroad. They can avoid prosecution by paying taxes and penalty. There are some who consider it unethical and unfair to law-abiding tax payers. But it is no amnesty, and other countries like the US and Britain have such schemes. What makes the law different from existing legal provisions is that it is more focussed and more stringent. The high tax rate and penalty for non-disclosure of income kept abroad exists in present laws. But the jail term for it has been increased from seven to 10 years. The law also makes confiscation and attachment of assets of those who have committed offences under it easier. Even filing of returns with inadequate information will attract prison terms. So, there is criticism that the bill gives too much power to tax officials.
It is difficult to consider the provisions of a bill that seeks to deal with the black money problem as too stringent. But it must be ensured that they are not misused. The bill has only been introduced in the Lok Sabha. It is likely to go for scrutiny by committees. If there are no safeguards against harassment of tax payers, they may be introduced. But it is important that the law remains tough on tax offenders. In its present form, it prescribes action against offenders, but it is necessary to identify the offenders first. This has to be done by the government by other means. It should also take steps to stop generation of black money that is taken outside the country. The law’s deterrence value lies in effective enforcement.