Initiatives
taken by the Investigation Division of Central Board of Direct Taxes (CBDT) for
unearthing black money :
I.
The Government of India has commissioned a study on unaccounted income/ wealth
both inside and outside the country bringing out the nature of activities
engendering money laundering and its ramifications on national security. The
study is being conducted by three national institutes viz. National Council of
Applied Economic Research (NCAER), National Institute of Public Finance &
Policy (NIPFP) and National Institute of Financial Management (NIFM), with
inputs from various ministries/departments. The study will be completed by the end
of 2012.
II.
A Directorate of Criminal
Investigation (DCI) has been created as an attached office of the
Central Board of Direct Taxes (CBDT) to track financial transactions relating
to illegal / criminal activities, including illicit cross-border transactions,
from the direct tax angle and bring such activities to justice. Creation of DCI
is also in line with FATF recommendations to exclusively deal with tax crimes,
including direct taxes.
III.
CBDT is coordinating with the Election Commission of India (ECI) for
controlling political expenditure and verification of affidavits filed by
candidates of political parties.
IV.
In order to strengthen the existing laws relating to black money, the
Government constituted a Committee under the Chairman, CBDT to examine the
measures to strengthen the existing legal and administrative framework to deal
with the menace of generation of black money through illegal means including,
inter alia,
a) Declaring wealth generated illegally as national
asset;
b) Enacting / amending laws to confiscate and
recover such assets; and
c) Providing for exemplary punishment against
its perpetrators.
The Committee submitted its report to the
Government on 29th March 2012. The report has been sent to
different Ministries / Organisations and State Governments for necessary
action.
V.
Information received under DTAA – Information from Germany &
France has been investigated. Tax evasion of more than Rs.600 crore detected
and taxes of Rs.200 crore has already been realized. Prosecution proceedings
have been launched in 17 cases pertaining to LGT Bank accounts. Assessment
proceedings have been initiated in cases relating to HSBC accounts. Further
information from outside the country is awaited in several cases. Information
received from different countries under the automatic exchange of information
arrangement is appropriately utilized for the purpose of investigation and
assessment.
VI.
Search & Seizure, Surveys – In the last three financial
years, the Investigation wing of the CBDT has detected undisclosed income of
over Rs.32,000 crore besides seizing undisclosed assets valued at over Rs.2,600
crore. The Income Tax Department (ITD) has further detected undisclosed
income of Rs.17,325 crore in surveys conducted at business premises.
VII.
Tax Prosecutions – Out of 1,548 prosecution cases disposed of
during the last three financial years, the ITD has obtained conviction in 97
cases besides fiscal compounding in 771 cases of admitted tax evasion, leading
to a success rate of 56.1 percent.
Beside above, the
Government has also taken the following steps to deal with the problem of Black
Money under a five pronged strategy in last 3 years:
1.
Creating an appropriate Legislative Framework
·
In 2009, we had 78 Double Taxation
Avoidance Agreements (DTAAs) in force. 75 of these DTAAs did not have specific
provisions for exchange of banking information and information without domestic
interest. Renegotiation of these DTAAs was started to broaden the scope of
Article concerning Exchange of Information. Till date we have completed
renegotiation in 29 cases; and renegotiation in remaining cases are under progress.
In addition we have finalised negotiation of 19 new DTAAs and 17 new Tax
Information Exchange Agreements (TIEAs). It may be clarified that as on
today we have 84 DTAAs. TIEAs are concluded with countries with which we do
not want to have DTAAs at this stage. Further, FM has approved negotiations for
TIEAs with 25 countries/jurisdictions on 31st December, 2011. Hence,
as on date, we have completed negotiation with 65 countries/jurisdictions (29
existing DTAA, 19 new DTAAs and 17 TIEAs). 33 treaties (21 DTAAs/ 12 TIEAs)
have been signed.
In addition to DTAAs
and TIEAs, the Government of India has also signed the Multilateral Convention
on Mutual Administrative Assistance in Tax Matters on 26 January 2012. These
Multilateral Conventions have been ratified which contain provisions for
automatic exchange of information, exchange of past information and assistance
in collection of tax claims. This has come into force on 1st June,
2012.
NOTE: Status of DTAAs/TIEAs
negotiations as on 1st August 2012 is given at the end as
Annexure-I.
·
Enacted legislation incorporating counter measure against non-cooperative jurisdiction (Section 94 A in Finance Act
2011).
·
PMLA was amended on 01.06.2009 to increase list of scheduled offenses.
·
Commissioned study to estimate quantum of Black Money both inside and outside
the country in March, 2011.
·
30 of our existing 84 DTAA also contain article for assistance in collection of
taxes including taking measures of conservancy. Government is trying to have
this Article in other treaties as well.
2.
Setting-up institutions to deal with illicit funds:
·
8 more Income Tax Overseas Units are being set-up (In addition to existing two
overseas units). Proposal has been sent to MEA for setting up 14 more such
units.
·
Computerized Exchange of Information unit (EOI Unit) has been set up.
·
Directorate of criminal investigations has been set up.
3.
Developing systems for implementation:
·
New policy for deployment of manpower to Directorate of Transfer Pricing and
International Taxation is implemented.
·
Manpower of FT&TR Division is doubled.
·
Directorate of Enforcement is strengthened by creating additional posts.
4.
Imparting skills to the manpower for effective action:
·
More than 100 officers were imparted specialized training abroad in field of
International Taxation and Transfer Pricing in F.Y. 2010-11 and 2011-12.
·
High level international seminar on transfer pricing was held in India in month
of June 2011.
5.
Joining the Global crusade against Black Money:
·
Issues of tax evasion, end of banking secrecy, past banking information,
automatic Exchange of Information have been raised by India in various G 20
meetings like in London, Paris, Washington, Cannes, etc.
·
India is playing a key role in Global Forum on Transfer Pricing and Exchange of
Information for tax purpose as Vice Chairman of Peer Review Group.
·
In June 2010 India became the 34th member of Financial Action Task
Force, responsible for enforcement of anti-money laundering (AML) and combating
financing of terrorism (CFT) regime. In December 2010 it became 9th
member of Eurasia group. India has also jointed Task Force on financial
integrity and Economic Development.
·
India is actively participating in policy groups of OECD and UN on Exchange of
Information, International Taxation and Transfer Pricing as observer and member
respectively.
·
ITD Global Conference was held in India in the month of December, 2011 to
discuss ways to address growing inequality due to tax evasion and generation of
black money
Result Achieved
(a) Huge
network of amended DTAA (84) and TIEA with tax havens (9).
(b) Specific
requests made by tax authorities have increased significantly
(c) More
than 12,500 pieces of Information regarding details of asset and payments
received by Indian citizen in several countries have been obtained which are
now under different stages of processing and investigation.
(d) 30,765
pieces of domestic information about suspicious transactions has been obtained by FIU which are under
investigation by respective agencies.
(e) Directorate
of Transfer Pricing has detected mispricing of Rs. 67,768 crore in last
financial year and in the current financial year (Rs 43,531 crore in F.Y.
2011-12). This has prevented shifting of equivalent profit out of the country.
(f) Directorate
of International Taxation has collected taxes of Rs. 48,951 crore from cross
broader transactions in last two financial years.
(g) Investigation
wing of CBDT has detected concealed income of Rs. 19,938 crore in last two
financial years. Focused searches have been conducted in a number of cases in
the current year on the basis of information received from foreign
jurisdictions under the provisions of Double Taxation Avoidance Agreements.
(h) Under
the EOI Article of DTAA with France, India has received information regarding
Indians having bank accounts in this financial year. In 219 cases, the
department has detected undisclosed income totalling Rs 565 crore and taxes
amounting to Rs 181 crore has already been realized so far.
6. Appraisal of
Indian Efforts by International Organizations:
(a) Mr. Jeffrey
Owens, head CTPA, OECD said on 12th December, 2011 that India has made
remarkable progress in tackling the issues of tax evasion and illicit money in
the last two years by negotiating TIEAs and it should be patient to see their
effective implementation. He added that India is playing a major role in G20
deliberations for combating tax evasion, black money and money laundering,
which are all correlated, and for better cooperation in tax information
exchange. It is also urging other countries to share past information, which is
a technical and legal issue.
(b) Mr.
Pascal saint Amans, Head of the Global Forum on Tax Transparency, In December,
2011, rated India among the first three, if not the first, in terms of
promoting the global standards on transparency, fighting tax evasion and having
the international community lining up.
(c) Global
Financial Integrity supported India’s stand in G20 Summit in Cannes in
November, 2011, on Automatic Exchange of Information becoming part of
International Standards.
(d) The
Task Force on Financial Integrity and Economic Development in a statement dated
17th October, 2011 stated that India is playing a major role in the global
crusade against tax crimes and is rapidly expanding its tax agreement network.
Some
of the amendments made through the Finance Act, 2012 to deal with the menace of
Black Money and to deter the generation and use of unaccounted money are
summarized as under:
(a) Introduction
of General Anti Avoidance Rules to counter Aggressive Tax Avoidance Schemes
(b) Introduction
of compulsory reporting requirement in case of assets held abroad.
(c) Allowing
for reopening of assessment upto 16 years in relation to assets held abroad.
(d) Tax
collection at source on purchase in cash of bullion or jewellery in certain
cases.
(e) Tax
collection at source on trading in coal, lignite and iron ore.
(f) Increasing
the onus of proof on closely held companies for funds received from
shareholders as well as taxing share premium in excess of fair market value.
(g) Taxation
of unexplained money, credits, investments, expenditures etc., at the highest
rate of 30 per cent irrespective of the slab of income.
(f) Introduction
of a reporting mechanism for assets and bank accounts in a foreign country.
Annexure-I
Status of DTAA/TIEA negotiations as on
1st August 2012 is as follows:
1. Status of
old DTAAs
No of countries with whom DTAAs were
in force in 2009.
|
No of countries with whom we are
negotiating article allowing for exchange of banking information along with
names
|
No of countries with whom these
renegotiations are finalised and signed along with names
|
No of the countries with which
revised agreement signed and entered into force
|
Total 78 (see the list
attached). Out of these, 3 DTAAs already had specific provision for exchange
of banking information
|
Total 75 (In the list of 78
countries, three countries, i.e. Iceland, Tajikistan and Myanmar already have
the specific provision and hence, remaining 75 countries were taken up for
renegotiation
|
Negotiation finalized: 29
Armenia, Australia, Bangladesh, Brazil,
Finland, France, Indonesia, Kenya, Luxembourg, Malaysia, Malta, Morocco, Nepal, Netherlands, Norway, Poland,
Romania, Singapore, Sri Lanka, South Africa, Spain, Sweden, Switzerland,
Tanzania, Thailand, UK, UAE, Uzbekistan, Zambia
|
Signed (11): Australia, Finland,
Malaysia, Nepal, Netherlands, Norway,
Singapore, Switzerland, Tanzania, UAE and Uzbekistan
Entered into force(5): Finland, Luxembourg,
Nepal, Singapore, Switzerland
|
Status of New DTAAs since 2009
No of countries with whom negotiation
for new DTAAs have been completed
|
No of new DTAAs signed
|
No of new DTAAs entered into force
|
Total 19
Albania, Bhutan, Chile, Croatia, Colombia,
Estonia, Ethiopia, Fiji Georgia, Hong Kong, Iran, Latvia, Lithuania, Mexico,
Mozambique, Senegal, Taiwan, Uruguay, Venezuela,
|
Signed(9): Colombia, Estonia,
Ethiopia, Georgia, Mexico, Mozambique, Lithuania, Taiwan, Uruguay
|
Entered into force(6): Estonia, Lithuania,
Georgia, Mexico, Mozambique, Taiwan
|
2. Total
DTAAs in force as on today
It may be clarified that as on today we
have 84 DTAAs, 78 above plus six more new DTAAs (with Estonia, Georgia,
Lithuania, Mexico, Mozambique and Taiwan)
3. Status of
New TIEAs since 2009
No of countries with whom
negotiations for TIEAs commenced in 2009 with names
|
No of countries with whom TIEA
negotiations are finalised along with names
|
No of countries with whom TIEA have
been signed along with names
|
Total 22 (Argentina,
Bahrain, Bermuda, Bahamas, British Virgin Islands, Cayman Islands, Congo,
Costa Rica, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein,
Macau, Maldives, Marshall Islands, Monaco, Netherland Antilles, Panama, Saint
Kitts & Nevis, Seychelles)
|
Total 17 (Argentina,
Bahamas, Bahrain, Bermuda, British Virgin Islands, Cayman Islands, Congo,
Costa Rica, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Macau,
Marshall Islands, Monaco, Saint Kitts & Nevis)
|
Signed (12): Argentina, Bahamas,
Bahrain, Bermuda, British Virgin Islands, Cayman Islands Isle of Man,
Guernsey, Jersey, Liberia, Macau and
Monaco
Entered into force(9):
Bahamas, Bermuda, British Virgin Islands,
Cayman Islands Isle of Man, Jersey, Guernsey Liberia and Macau
|
4. In 2012,
negotiations for TIEAs commenced with 25 more countries/jurisdictions as under:
1. Andorra
2. Anguilla
3. Antigua and
Barbuda
4. Aruba
5. Barbados
6. Belize
7. Brunei Darussalam
8. Cook Islands
9. Curacao
10.
Dominica
11.
Dominican Republic
12.
Faroe Islands
13.
Greenland
14.
Grenada
15.
Honduras
16.
Jamaica
17.
Montserrat
18.
Peru
19.
Saint Lucia
20.
Saint Vincent and the Grenadines
21.
Samoa
22.
San Marino
23.
Saint Maarten
24.
Turks and Caicos
25.
Vanuatu
5. In addition
to DTAAs and TIEAs, the Government of India has also signed the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters on 26 January
2012 which has come into effect on 1st June, 2012.
6. List of DTAA
countries as on 2009 (78)
Sr. No.
|
Country with which India has DTAA
|
Whether under renegotiation
|
1.
|
Armenia
|
Yes
|
2.
|
Australia
|
Yes
|
3.
|
Austria
|
Yes
|
4.
|
Bangladesh
|
Yes
|
5.
|
Belarus
|
Yes
|
6.
|
Belgium
|
Yes
|
7.
|
Botswana
|
Yes
|
8.
|
Brazil
|
Yes
|
9.
|
Bulgaria
|
Yes
|
10.
|
Canada
|
Yes
|
11.
|
China
|
Yes
|
12.
|
Cyprus
|
Yes
|
13.
|
Czech Republic
|
Yes
|
14.
|
Denmark
|
Yes
|
15.
|
Egypt
|
Yes
|
16.
|
Finland
|
Yes
|
17.
|
France
|
Yes
|
18.
|
Germany
|
Yes
|
19.
|
Greece
|
Yes
|
20.
|
Hungary
|
Yes
|
21.
|
Iceland
|
Already have provision for exchange of
banking information
|
22.
|
Indonesia
|
Yes
|
23.
|
Ireland
|
Yes
|
24.
|
Israel
|
Yes
|
25.
|
Italy
|
Yes
|
26.
|
Japan
|
Yes
|
27.
|
Jordon
|
Yes
|
28.
|
Kazakstan
|
Yes
|
29.
|
Kenya
|
Yes,
|
30.
|
Korea
|
Yes
|
31.
|
Kuwait
|
Yes
|
32.
|
Kyrgyz Republic
|
Yes
|
33.
|
Libya
|
Yes
|
34.
|
Luxembourg
|
Yes
|
35.
|
Malaysia
|
Yes
|
36.
|
Malta
|
Yes
|
37.
|
Mauritius
|
Yes
|
38.
|
Mongolia
|
Yes
|
39.
|
Montenegro
|
Yes
|
40.
|
Morocco
|
Yes
|
41.
|
Myanmar
|
Already have provision for exchange of
banking information
|
42.
|
Namibia
|
Yes
|
43.
|
Nepal
|
Yes
|
44.
|
Netherlands
|
Yes
|
45.
|
New Zealand
|
Yes
|
46.
|
Norway
|
Yes
|
47.
|
Oman
|
Yes
|
48.
|
Philippines
|
Yes
|
49.
|
Poland
|
Yes
|
50.
|
Portuguese Republic
|
Yes
|
51.
|
Qatar
|
Yes
|
52.
|
Romania
|
Yes
|
53.
|
Russia
|
Yes
|
54.
|
Saudi Arabia
|
Yes
|
55.
|
Serbia
|
Yes
|
56.
|
Singapore
|
Yes
|
57.
|
Slovenia
|
Yes
|
58.
|
South Africa
|
Yes
|
59.
|
Spain
|
Yes
|
60.
|
Sri Lanka
|
Yes
|
61.
|
Sudan
|
Yes
|
62.
|
Sweden
|
Yes
|
63.
|
Swiss Confederation
|
Yes
|
64.
|
Syria
|
Yes
|
65.
|
Tajikistan
|
Already have provision for exchange of
banking information
|
66.
|
Tanzania
|
Yes
|
67.
|
Thailand
|
Yes
|
68.
|
Trinidad and Tobago
|
Yes
|
69.
|
Turkey
|
Yes
|
70.
|
Turkmenistan
|
Yes
|
71.
|
UAE
|
Yes
|
72.
|
Uganda
|
Yes
|
73.
|
UK
|
Yes
|
74.
|
Ukraine
|
Yes
|
75.
|
USA
|
Yes
|
76.
|
Uzbekistan
|
Yes
|
77.
|
Vietnam
|
Yes
|
78.
|
Zambia
|
Yes
|
Note 1:The three countries, i.e.
Iceland, Tajikistan and Myanmar already have the specific provision and hence,
remaining 75 countries were taken up for renegotiation.
Source : PIB, August
10, 2012
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