Six ways in which black money is created

Black money is turning out to be big issue with many political leaders and civil society members speaking a lot about it. ET brings out the ways in which the black money is created. METHOD 1: MULTI-LEVEL MARKETING SCHEME A recent trend is to use international debit or credit cards issued by offshore banks. This enables easy usage. STEP 1: A group of individuals float a multi-level marketing scheme or investment scheme promising extraordinary returns to investors. STEP 2: Investors deposit cash or cheques in bank accounts floated by the firm. The firm, in turn, issues them post-dated cheques. STEP 3: The firm transfers the money to personal bank accounts of the promoters. STEP 4: The promoters wire transfer the money to an offshore bank account in a tax haven. They wire transfer it again to another offshore bank account, in another tax haven, to widen the trail. STEP 5: The offshore bank issues a credit or debit card valid anywhere in the world, which a promoter can use for transactions. LIVE EXAMPLE: In 2009, India's Financial Intelligence Unit (FIU) received suspicious transactions report from banks that a large number of deposits had been made in a few accounts. Further investigation revealed these accounts had a common permanent account number (PAN), address and contact numbers, and that it was a multi-level marketing scheme promising extraordinary returns. As explained above, the firm transferred the money collected to personal bank accounts of its directors. Fifteen operators floated 10 firms, which in turn opened 35 bank accounts in 11 different banks. One operator alone received Rs 130 crore in his accounts over a period of 16 months, and the state police have attached Rs 190 crore of assets in various locations. INDICATORS: Lifestyle beyond known sources of income Ownership of assets abroad, but not declared in tax returns Large inter-account transfers with no economic rationale Cash transactions with unknown persons

Withdrawal of large foreign remittance in cash METHOD 2: DISGUISED OWNERSHIP Increasingly, criminals want to own legitimate business. It could be to earn a return or to convert black money into white. A typical example of how this is done: STEP 1: Criminal X generates Rs 10 crore in cash from illegal activities in India, and wants to 'launder' it abroad. He uses the 'hawala' route to transfer the money: he gives the Rs 10 crore cash to a local hawala operator. The operator, for a fee, arranges to deposit the sum in an offshore bank account belonging to a company floated by X. STEP 2: The offshore company buys shares in a domestic company promoted by X, that too at steep valuations STEP 3: The domestic company pays a high salary and dividends to X. Black becomes white, and X can show the money as income. INDICATORS: International corporate structure with no visible benefits Shares of domestic companies sold at higher valuations Tax returns don't support capital contribution by investors Large cash holdings Offshore companies will do business outside the country where it is formed. Such companies can be run by a nominee director and are often not required to publish annual accounts. METHOD 3: MIXED SALES Mixing illicit money sources with legit ones is a popular method because it's hard to detect, especially if there is a large cash component in the legal business. STEP 1: Illegal money is mixed with actual sales, by depositing in the company's bank account. The cash deposit will be justified as legitimate business income, say, cash receipts in restaurant. STEP 2: The company projects the fabricated sales as total income and files an income-tax return. However, it avoids paying tax on the total income by showing losses in other business lines or by showing fictitious deductions. STEP 3: Black has become white, and promoters can use it to buy assets. INDICATORS: Large increase in cash turnover and sales

No commercial reasons for money inflows Promoter has poor knowledge of business Transactions don't have supporting documents, and don't fit the company's profile Costs incurred but no corresponding increase in turnover METHOD 4: 'SMURFING' This type of transaction is usually done to evade notice by authorities monitoring transactions above a certain threshold. STEP 1: X deposits illegal proceeds into many bank accounts. The amount transferred is below the threshold level for reporting suspicious transactions. If Rs 10 lakh is the threshold level, deposits will be for Rs 9 lakh. This is called 'smurfing'. STEP 2: The money is transferred from these multiple accounts to an offshore bank account to take the trail away from the source. STEP 3: A loan agreement is signed between the holder of the offshore bank account and X. STEP 4: Once he receives the money, X can spend the money to purchase assets. INDICATORS Cash received from countries with high level of corruption Concealed transportation of cash An occasional high cash transaction Deposit is made in accounts of 'straw men' or nominees

LIVE EXAMPLE A suspicious report was raised against a securities market firm that a large number of cash deposits were made into the company's account and that it was subsequently transferred to another entity in the same business. It was found that both companies had a common address and a common person was operating both accounts. FIU found 78 bank accounts related to the two entities where there was a substantial cash transaction. FIU passed on the information to the Central Board of Direct Taxes (CBDT), which unearthed an all-India network of money laundering through 236 bank accounts. The companies were set up by a chartered accountant to conduct share-broking activities, but many firms were neither brokers nor sub-brokers.

The modus operandi was to move cash between different companies, showing non-existent share trading to claim a speculative loss or gain for customers. Software used by legal brokers was installed to generate bills so that it looks genuine. METHOD 5: TRADE MISPRICING Traditionally, goods exported and imported were either priced lower or higher to enable money laundering. Or, goods exported were different from the description. Below is a description of an actual case investigated by FIU, which got a suspicious report that a cab rental firm received Rs 100 crore as advance payment for export obligations that did not relate to its line of business. The company had also issued cheques of small value (less than Rs 10,000) to various people. During investigation, it was found the chairman of the firm had several international bank cards. Fake invoices to show diamond purchases of Rs 188 crore were also recovered during the searches. No purchases were made. The company received Rs 300 crore from buyers in three overseas locations: Singapore, Dubai and Hong Kong. Interestingly, receivers of export shipments were different from people who sent advance payments. With current technology, the Organisation for Economic Cooperation and Development (OECD) says it's easy to modify invoices or produce fictitious invoices. And corporations are easy to set up to show that they have received goods. INDICATORS: Discrepancies between customs filings and invoices A country is not known for import and export of goods Large difference between declared and market value Payments made by an offshore company Commission paid to third parties with no supporting documentation METHOD 6: MONEY TRANSFERS TO BENAMI ENTITIES This case was outlined by the Karnataka Lokayukta while probing illegal mining in the state. With demand for iron ore skyrocketing, Eagle Traders & Logistics (ETL), a company owned by sitting Karnataka MLA B Nagendra, devised an ingenious route to source and export iron ore illegally through a network of companies. STEP 1: ETL agrees to source from associates like Swastik Nagaraj and Karapudi Mahesh, whose job was to illegally mine iron ore from mines. The job of these associates was to create layers to mask the actual source, for which, they were paid "risk money". STEP 2: Iron ore sold to exporters, who deposit the money in one of the five bank accounts of ETL.

STEP 3: ETL transfers money to Swastik and Karapudi. In one of the five ETL bank accounts alone, there was a combined credit and debit of Rs 649 crore between September 2007 and February 2011. STEP 4: Swastik and Karapudi issue cheques to persons who may be either fake or under benami names or unregistered dealers of iron ore. These individuals make withdrawals on the same date, in most cases in denominations of Rs 9 lakh. The same happens on the credit side. The case of Janardhana Reddy-promoted Obulapuram Mining Company: Tracing black money is a task made difficult by intricacies employed by offenders, as this case involving Janardhana Reddy-promoted Obulapuram Mining Company (OMC) documented by the Karnataka Lokayukta shows 1. UNDER-INVOICING OMC exports 852,000 tonnes of iron ore at below market price to GLA Trading International, a Singapore-registered company 2. FAMILY PLAN JANARDHANA Reddy is the director of GLA, which is owned by GJR Holdings International, a company registered in Isle of Man. GJR is, in turn, owned by Interlink Services Group, which is registered in Virgin Islands. Both Isle of Man and Virgin Islands are tax havens. GJR refers to Gali Janardhana Reddy and GLA to Gali Lakshmi Aruna, Reddy's wife. 3. TAX EVASION GLA sells iron ore to outside party at market price. It pockets the profit, that too inflated, instead of Indian entity OMC. It can move the profit to its companies in tax havens, which are owned by Reddy family members. The under-invoicing in India in two years when Reddy was the director of GLA is estimated at Rs 215 crore. Due to underinvoicing, OMC under-paid customs duty and corporate tax. 4. BLACK TO WHITE IF the IT department failed to detect the under-invoiced portion, it would have returned to India as a foreign investmentblack becomes white. tax impact will be lower.

Budget 2012: Govt tightens screws on black money generation

It's an all-out war on black money. Facing criticism for not doing enough to stop the menace, the government on Friday announced a slew of measures to prevent generation and circulation of black money and to make it more difficult to stash undeclared income abroad.

Finance minister Pranab Mukherjee said he planned to introduce a white paper on black money in the current session of Parliament. The government plans to amend Section 149 of the Income Tax Act to allow for reopening of I-T return filings up to 16 years, from six years now. This amendment is expected to come into effect from July 1, 2012. Under the current provisions, the time limit is 6 years but tax authorities say it takes much longer to gather information on assets located outside India. The finance minister also plans to make filing of I-T returns mandatory for every resident having any asset located outside India (including financial interest in any entity) or signing authority in any foreign account. "Furnishing of return would be mandatory irrespective of whether the resident taxpayer has taxable income or not," the finance bill says. This amendment will take effect from April 1, 2012, and will apply to the 2012-13 and subsequent assessment years. In order to curb the practice of laundering money by taking advantage of the basic exemption limit, the finance bill proposes to levy a 30% tax on unexplained credit, money, investments and expenditure that is deemed as income under Sections 68, 69A, 69B, 69C or 69D. This levy will be irrespective of the slab of income. "No deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of the Act in computing income under the said sections," the finance bill said. The government also plans to strengthen the penal provisions on undisclosed income found during a search. It plans to expedite prosecution proceedings under the IT Act. The finance bill also said that share premium in excess of the fair market value would be treated as income and this amendment would come into effect from April 2013.

Black Money: Swiss banks still draw rich despite secrecy blows
ZURICH: Swiss bankers are on the defensive with their secretive industry under sustained attack for sheltering tax dodgers. Some cannot travel abroad for fear of arrest in tax investigations.

But the fur coats and expensive cars on display around the Paradeplatz square at the heart of Zurich's financial district - as well as booming house prices - tell a different story: business is good in a city now ranked the world's costliest.

Zurich overtook Tokyo as most expensive according to a new ranking by the Economist Intelligence Unitbecause of the soaring Swiss franc. The currency is up 30 percent since 2008, despite a cap imposed last year by the central bank, because investors view it as a safe haven in global economic turmoil. The same factors make the country's banks attractive despite the gradual erosion of bank secrecy: political stability and neutrality, low government debt and an economy which has been relatively resilient through the financial crisis. Although Swiss banks - especially the country's biggest UBS - have shared in the pain of the crisis, they have retained an image for solidity, particularly in contrast to their euro zone rivals, bolstered by new capital rules that are the world's strictest. The swelling ranks of Chinese and Indian millionaires who have developed a taste for Swiss luxury watches are also drawn by the country's quality-seal when it comes to banking their new wealth, helping to replace U.S. and European tax exile clients. Figures published in recent weeks show that six of the biggest Swiss banks together pulled in net new client assets of more than 100 billion Swiss francs ($108.96 billion) in 2011. "Switzerland PLC remains a hugely popular global epicentre of wealth. Clearly in the global environment of the last 12-24 months people have been looking for safekeeping," said Sebastian Dovey of wealth management consultancy Scorpio Partnership. "Net new assets might reflect a positive mood from 12 months ago. Will we see a similar strength in 12 months time? I suggest we probably will," Dovey added. While Singapore and London are also doing well, Dovey noted Switzerland has defended its position as the biggest centre of offshore wealth. It remains the top choice for investors in Asia even if Singapore might overtake it in a decade. "ISLAND OF THE BLESSED" Asia is a particular strength of UBS which drew net client inflows of 42 billion francs in 2011 despite the blow of a $2 billion trading scandal in September just as it was starting to restore trust after a 2008 state bailout. "Many observers still see Switzerland as a kind of island of the blessed in an environment plagued by crisis," UBS chairman Kaspar Villiger told a dinner in February to launch a year of celebrations for the bank's 150th anniversary.

"The question is whether such a situation is sustainable given the worrying number of difficult challenges our country is confronted with." Most critical of those challenges at the moment is settling a long-running tax dispute with the United States, which is investigating 11 banks including Credit Suisse and Julius Baer for helping Americans evade taxes. The sense of urgency has increased since Switzerland's oldest bank, Wegelin, broke itself up in January a week before it was indicted on charges that it helped Americans evade taxes on at least $1.2 billion hidden in offshore bank accounts. "In Switzerland, you would believe that was like the end of the world but if you interview wealth clients around the world ... the disappearance of Wegelin is a side story," Dovey said. "However the wider issue of the industry needing only in future to handle compliant assets is going to have major ramifications both in Switzerland and elsewhere." Banks are likely to have to pay hefty fines and hand over thousands of client names to end the U.S. investigations, but the issue should not have a big impact on assets as most already closed the accounts of U.S. offshore clients after UBS paid $780 million to settle criminal charges in 2009. A survey by the Boston Consulting Group (BCG) shows that assets of North American origin shrank to 2 percent of the total $2.1 trillion of offshore wealth held in Switzerland at the end of 2010 from 18 percent just four years earlier. That helps explain the fall in offshore assets managed in Switzerland from a 2007 peak of 2.7 trillion francs, but the country has managed to compensate by attracting clients among the new wealthy in booming emerging markets like Latin America and the Middle East and Africa. SHIFT TO NEW WORLD FROM OLD WORLD "Even under new circumstances and after a certain drain of assets, Switzerland has a lot to offer. For the medium-term I'm very confident, even for money from the 'old world'," said Zurichbased BCG partner Peter Damisch. "Emerging markets will get more and more important. We see a tectonic shift," he said. "Five years ago, two thirds of assets were from the 'old world' and one third from the 'new world'. Five years down the road it will be exactly the opposite." Swiss banks remain exposed in western Europe, which accounts for about half its banks' offshore assets under management - or $1 trillion - and where Switzerland has also come under intense pressure from its neighbours to make sure accounts are taxed. Switzerland struck deals with Germany and Britain last year to allow citizens to pay tax on accounts without revealing their identities which it hoped would be blueprints for other cashstrapped countries in Europe, including Greece and Italy.

But the agreements have faced resistance from the European Commission, which wants Switzerland to accept an automatic exchange of bank information, and from the German opposition Social Democrats which sees them as too lenient on tax evaders. That has led some senior bankers to voice what would have been unthinkable a few years ago: that Switzerland should stop fighting to defend what remains of bank secrecy. "If the Americans get thousands of client data, the Europeans will want that too," said Pierin Vincenz, chief executive of Switzerland's third biggest bank Raiffeisen. "We must finally show that Switzerland is serious with a 'clean money' strategy. And that will in the end only be possible with an internationally supported strategy." That idea still strikes fear into the hearts of many Swiss bankers after decades of easy profits that came from managing untaxed assets, making them "fat but impotent" in the words of Hans Baer, the late former chairman of Julius Baer. JOBS AT RISK Daniel Lampart, chief economist of the Swiss Trade Union Federation, said pushing banks to manage only taxed funds would shave 0.2-0.3 percent off annual gross domestic product in the next few years and put 5,000 to 10,000 jobs at risk. But he said it was in Switzerland's interests to clean up its banking industry: "There's no reasonable explanation for a country to give an easy way out to people with taxes to pay at the expense of other countries." Swiss conservatives are more worried. Thomas Matter, banker turned politician from the rightwing Swiss People's Party (SVP), has warned that accepting only "clean money" could cost the banking industry 50,000 jobs. The financial industry accounts for about 6 percent of jobs in Switzerland - over 200,000 - and contributes more than 10 percent to national output, accounting for a third of growth in last 20 years. However, while Zurich's Bahnhofstrasse shopping street might not sell as many Rolexes in future, the Swiss economy could live with fewer bankers, given that unemployment is just 3 percent. The experience of private bank Sarasin, which has taken a pro-active stance on shedding untaxed assets in recent years, should also provide some consolation for the industry. It is predicting 8-10 percent growth in net new assets in 2012. And despite a change of ownership which deterred customers in the second half of 2011, Sarasin still managed to attract net new assets of 1.5 billion francs for the year, many of them from clients in Asia and the Middle East. Oswald Gruebel, former chief executive of both Credit Suisse and UBS, is sanguine about the future. "We still have a lot of indisputable advantages compared to other countries and also a good image with investors despite the incidents of recent years," he said in a recent speech. "In 10 years we will experience another economic boom."

What obstacles are preventing black money retrieval by the government

From new agreements with tax havens to dedicated teams tracking data, the government says it's doing lots to crack down on black money. But it all falls flat because the authorities don't have the laws, skills and political will to translate this into results. Many means, but few ends It's a telling statement that the government's two biggest successes in catching Indians with black money in offshore banks have been the result of information that came to it providentially. In March 2009, Germany shared a list that contained names of 26 Indians having unreported accounts with LGT Bank in Liechtenstein. And, earlier this year, France shared details of 700 accounts of Indians in HSBC Bank Geneva. France and Germany bribed staffers of the two banks for information on their citizens, and India happened to be an accidental beneficiary. The Indian government says once its new and improved tax treaties with various countries kick in, it can chase down black money held by Indians on its own. Finance minister Pranab Mukherjee is prone to launch into a litany on the tax treaties being enforced, signed, negotiated or renegotiated by India. When seen along with the tax reform being undertaken within, he believes, this could be an inflexion point in the drive to recover black money. Arun Kumar, who has written several books on black money, says it does come down to the government not because of what it is doing, but because of what it is not doing. "The problem is political," says the professor at the Jawaharlal Nehru University. Adds a senior income-tax official in Mumbai, speaking on the condition of anonymity: "The IT department itself cannot initiate any drive on its own to bring black money stashed in offshore banks as it is a policy decision to be taken by the Central government." That wavering intent colours everything the government has done so far on black money, be it on opening lines of communication outside, or connecting data and transaction sources inside for solid leads, or empowering tax officers. It's why, as the following two stories show, while UK and Germany are moving purposefully to bring back billions, India is still flailing around. Tax Treaties: One Rule for UK, Another for India The homepage of Switzerland's finance ministry website features two tax treaties the poster boy of banking secrecy has negotiated with United Kingdom and India this year. The two treaties are studies in contrast, a proof that developing nations have little leverage with tax havens to part with information. The treaty with UK allows London to tax all its citizens holding deposits in Switzerland. That too retrospectively, which means evaders will have to pay up. And punitively: the principal amount will be taxed between 19% and 34% depending on how long the deposits have been held. And, income from deposits will be taxed between 27% and 48%.

So, a UK citizen holding $100 million in Swiss banks will have to pay up to $34 million as tax. Further, if the deposit earns interest of, say, $10 million, an additional tax of up to $4.8 million will be levied annually. Of course, if it is legitimate money and has been taxed, the UK citizen can claim a set off. The UK expects to add 5 billion (about Rs 38,500 crore) to its coffers. On top of this, each year, UK can seek tax-related information of 500 individuals from the Swiss, who are complying, as evidenced from Switzerland's offer to make a down payment of 385 million towards unpaid taxes of UK citizens. While UK's treaty with the Swiss strives for universal coverage of its citizens, India's double taxation avoidance agreement (DTAA) is selective and puts the onus on Indian authorities to provide evidence of suspicion. Both treaties have the same point of origin -- the model agreement of the Economic Cooperation and Development (OECD) but they are far removed. INDIVIDUAL, NOT INSTITUTIONAL The Indian government cannot seek information from the Swiss authorities retrospectively. It can do so only from April 2012, though it's not clear whether this means it can ask for information only for transactions done after that date. The tax rates are lower: nothing on the principal and the lowest rate India levies on OECD nations 10% for interest income. So, Switzerland deducts 10% tax on all deposits held by Indians and gives a cumulative amount to India each year. However, it does not disclose the identity of the deposit holders or how much each held. The legitimate money seeks a refund for double taxation with the Indian authorities. The illegitimate money does not mind paying the 10% and staying silent. To catch them, India will need to know lots about them. It cannot go on what authorities call a 'fishing expedition' and ask the Swiss for, say, information on all deposits held by all Indian citizens. "It is one request about one taxpayer at a time," says Anupama Jha, executive director of Transparency International, a notfor-profit anti-corruption agency. In order to make a successful request, the government needs to furnish specific information. The OECD 'checklist of information request' has 18 points, which include name of the person, personal details like date of birth, account number and the bank branch address, and more.

This is the agreement that was revised in 2010 to give it more bite. Jha feels even this will be "ineffective". "Think of it like this," she says. "Black money is like water running freely through the pipes, but the tax-information agreement will only allow us to capture this black money like a slowly leaking tap drop by drop by drop."

WILL ANYTHING CHANGE? When India first signed a treaty with Switzerland in 1994, the objective was to stop income from being taxed twice. The treaty had no provisions to share tax information. After the 2008-09 slowdown, as sentiment turned against tax havens, India started signing taxinformation exchange agreements (TIEAs) (See graphic: New Agreements). Developed by the OECD in 2002, TIEAs are intended to increase the exchange of information between two countries. Most agreements signed are similar in nature, the exceptions being rich, developed countries like UK and Germany. Tax Justice Network, a Belgiumregistered independent organisation that is fighting banking secrecy in tax havens, says countries like Switzerland will agree to the OECD model for sharing information. But, says R Vaidyanathan, professor of finance at the Indian Institute of Management, Bangalore (IIM), when actual requests are made to countries, they use domestic laws to turn them down. A retired Indian IT official with experience in international taxation matters says the amended DTAA has a clause that prohibits Swiss authorities from taking cover under local laws. "The Swiss have to provide information on ownership of bank accounts," he says, not wanting to be named. "Only when we make a request for information can we test the effectiveness of the agreement," concedes a current income-tax official on the condition of anonymity.

According to the CBDT spokesperson, the government has initiated about 300 requests so far and received responses for about 100. "It does not mean the trail stops there," says the same official. "It could be Mauritius replying that so and so received this much, but has transferred the money to another tax haven. So, another request will have to be made." The retired IT official says there is no comparison between the Indian and UK treaties. "The UK has given up its right to find who has deposits in Swiss bank accounts," he says. "Rather, it has cockaded on filling its coffer to bridge its fiscal deficit. We seem to have preferred identification of who holds deposits there." Tax authorities: Multiple Indian organisations chasing multiple leads. _ Two years after India sought permission from Singapore to conduct investigations there in the money-laundering case involving Pune-based stud farm owner Hasan Ali Khan, the two governments are still discussing the request.

A chief commissioner in Mumbai was probing shell companies of a leading corporate to detect black money parked abroad by it. He was transferred to Chennai. Those are just two kinds of walls investigators run into when looking into a tax-evasion case. Be it seeking information or wading through process, be it managing the political pressure inside or the economic motives outside, life is a series of walls for the authorities. Back home, unless there is a suspicion of wrongdoing, the trail of black-money detection starts with data on financial transactions. Poring over this data are two networks that have come up in the past few years. The first is the Financial Intelligence Network (FINnet). Set up by the Financial Intelligence Network (FIU), which collects and analyses information on money laundering and terrorist financing, FINnet comes under the revenue secretary in the ministry of finance. FINnet collects suspicious transaction reports (STRs) and cash transactions report (CTRs) in an electronic format from banks, insurance companies and securities market participants. An example of an STR is, say, Rs 50 crore coming into a bank account, and quickly going out in even amounts to many other accounts, while that of a CTR is someone paying cash to buy a luxury car. After analysing the STRs and CTRs, the FIU forwards them to investigating agencies -- the Central Board of Direct Taxes (CBDT) for tax-evasion cases and the Enforcement Directorate (ED) for money laundering ones. Network number two is housed in, and controlled by, the CBDT, better known as the income-tax department. Called the Integrated Taxpayer Data Management System (ITDMS), it electronically collates information collected from various sources of taxation -- like tax deduction at source, e-returns and annual information returns (AIRs) -- to create a 360-degree tax profile of high net-worth assesses.

The number of STRs received by the FIU has increased from 968 in 2007-08 to 7,027 in 200910. However, according to the Financial Action Task Force (FATF), which is an inter-country organisation created to tackle money laundering and terrorist financing, it is not commensurate to the size of the Indian economy. INFORMATION GAPS The FATF estimates two million to three million proceeds-generating offences in India every year, including about 80,000 economic crimes. "Most of the data passed by FIU is information already in the public domain," says a senior IT official in the Mumbai office, on the condition of anonymity. "Occasionally, they send useful information." FIU director PK Tiwari declined an interview request. "For effective tracking of money laundering cases, it is critical to have an integrated information technology network, which we don't have," says Rahul Garg, partner with PricewaterhouseCoopers. "For example, the core banking software used by banks does not interact with income tax, except for AIR." The Mumbai tax official quoted earlier says sourcing information from tax havens is unpredictable. "It can come in 15 days," he says. "In many cases, it takes months and years." The key, says another IT official in Delhi, is not to follow all cases. "Pick a case that will have a good demonstration effect and will act as a deterrence," he says. Another problem is that of the 80-odd countries with which India has signed a double taxation avoidance agreement, a tax information-sharing clause is present only with 28 countries. So, if money is routed through one of the other 52 countries, the investigating authorities will hit a dead end. POOR PROSECUTION RECORD Stashing black money abroad has two stages: evade taxes and 'launder' money abroad. Indian tax laws make no distinction made between income earned illegally or legally. Thus, the criminality is tried under the Criminal Procedure Code (CrPC), and money laundering under the Prevention of Money Laundering Act (PMLA), 2002. ED, which handles moneylaundering cases, is yet to successfully prosecute even one case, according to the FATF. This is partly because of the way the PMLA Act was structured. Earlier, ED had to wait till the criminality of illegal activities was established before it could begin its prosecution for money laundering. Given the slow pace of courts, it ended up prosecuting only two cases till June 2009, when two crucial changes were made to the PMLA. Now, the ED can start its investigation simultaneously even as prosecution under criminal offence is under progress. According to the FATF, ED has initiated 798 investigations, of which, 734 were taken up in the new dispensation. Out of this, however, it has done just six prosecutions and no convictions.

"Legislation is only a part of the solution," says Arun Duggal, chairman of Shriram Capital. "Bringing to completion current cases is the key." Duggal, who has worked as a private banker with the Bank of America, says the record is mixed even in developed nations to recover black money stashed abroad, especially in corruption-related and tax evasion cases. "It is easy to erase the trail," he says. "Authorities should not start till they have everything." Laundering of ill-gotten money is usually done by routing through a layered structure so that it acquires a legal cover. Along with skill, cracking this requires political will. "It requires a concerted drive from the government to secure the cooperation of other governments and to create international consensus on the issue," says the Mumbai tax official.

INDIA`S BLACK MONEY IN SWISS BANK

This is not so surprising .India is the world`s most corrupt country.Corruption is not new in India.Recently due to international pressure, Swiss government agreed to disclose the names of the account holders only if the respective government formally asked for it. Black money in Swiss banks Swiss Banking Association report, 2006 details bank deposits in the territory of Switzerland by nationals of following countries: Top five India- $1,456 billion Russia $ 470 billion UK -$390 billion Ukraine $100 billion China $ 96 billion India has more money in Swiss bank than all the other countries combined.Second best Russia has 4 times lesser deposit. US is not even there in the counting in top five. 609 people in India having legal property more than Rs- 100 crores (Rs- 10 Million). Indian President one day living cost is Rs-8 crore, living in a place where 350 flats.One day Indian Parliament running cost is around 9 crore Rupees.Britishers looted 350 Lakh Crore in 250 years whereas Indian himself looted 330 crore. 70 Lakh crore only deposited in swiss bank. 84000 corrupt people in India.India has around 450 Billion dollar of coal deposit & 170 billion of iron ore deposit,looted by state politicians .According to Indian Government around 1 Lakh place in India where people doing illegal mining. Dishonest persons, scandalous politicians and corrupt IAS, IPS officers have deposited in foreign banks in their illegal personal accounts a sum of about $ 1500 billion, which have been misappropriated by them. From 2003 to 2010 out of 5,635 IPS officers fifty(50) IPS officers were resigned and joined private company. This amount is about 13 times larger than the countrys foreign debt. With this amount 45 crore poor people can get Rs 1,00,000 each. This huge amount has been appropriated from the people of India by exploiting and betraying them. Some 80,000 people travel to Switzerland every year, of whom 25,000 travel very frequently.Obviously, these people wont be tourists. Why our Indian Government is not asking to swiss Bank? Well the answer is

simple , our Government is working under the influence of those politicians & industrialists who have huge deposit in Swiss bank.They cann`t expose their own people. USA have settled their Swiss bank Account & their top Billionares in their countries paid to their country 50% of their Money which includes Gates & Bloomberg.Italy got 6.4 Billion dollar from swiss Bank,Germany got 5.7 Billion dollar from swiss Bank & France got 1.7 Billion dollar from swiss Bank. Schweitzer Illustrierte, a Swiss news magazine,published on 19th November 1991, has alleged in an old issue that the Soviet intelligence agency KGB had deposited US $2.2 billion in a Swiss bank account in 1985 in the minor account of Rahul Gandhi managed by his mother Sonia Gandhi . Janata Party President Dr Subramanian Swamy, who had secured an order from the Delhi High Court to the CBI to investigate alleged receipt of slush money by late former Prime Minister Rajiv Gandhis family, has cited a November 1991 issue of the Swiss magazine in support of his charge.He has further claimed that the payments were authorized by CPSU by a resolution CPSU/CC/No 11228/3 dated 20/12/1985 and the same was also endorsed by the USSR Council of Ministers in Directive No 2633/Rs dated 20/12/1985. He also claimed that these payments had been coming since 1971 as the payments received by Sonia Gandhis family have been audited in CPSU/CC resolution No 11187/22 OP dated 10/12/1984. Reference: http://swissprivacy.tripod.com/id8.html Why Government is not taking action on corrupt peoples ? Why CBI is not independently working? well answer is simple ,Government is taking lots of money in the name of party fund and also taking help from those politicians who are involved in criminal charges.Whole police in India is working under politicians. According to RBI(Reserve Bank Of India) Rupees 17,18,826 crore notes print in India between year 2000-2010. Rupees 10 Lakh Crore money incirculation in India. Generally 2-3 % of GDP money circulation in other countries. But Indian Government has allowed four Swiss bank & Eight Bank of Italy in India. Sources says that NGO is also engaged in converting black money into white Money. swiss bank(ubs) revealed 6000 USA people names . In may 2008 Germany bank revealed 28 people names but government is still hiding their names. Even the Supreme court of India asked for names three times. But Government only make deal with 23 countries of Double Taxation. USA got his money, France , Italy , countries like Singapore fought and get their money.India has more than 3.5 crore taxpayers. Black Money can be used by terrorists. Probably they are trying to move money to other countries or will invest in real-estate like in dubai or arab countries.After huge pressure from media & civil society Government has joined FATA (Financial Action Task Force) group only to delay issue. http://indiatoday.intoday.in/site/Story/126998/LATEST%20HEADLINES/indianlink-to-swiss-money-trail-revealed.html In the data shared by Ex-Swiss banker Rudolf Elmer, there are at least three companies that go by the name of Annapurna. These accounts have been opened in the New York branch of the Swiss Bank Julius Baer.These accounts are Annapurna Convertible Ltd, account number 420331. Annapurna Leverage Ltd, account number 427039 .Annapurna

Convertible USD, account number 431916.Money running into crores of rupees has been stashed away in these accounts.57 million dollars or Rs 259 crore have been stashed away in Annapurna Convertible ltd. 18.6 million dollars or Rs 84 crore are lying in Annapurna Leverage Limited.And 10.3 million dollars or Rs 45 crore are hidden away in the account of Annapurna Convertible.Interestingly, the documents list the same company and same person as managing all the Annapurna accounts.Annapurna Convertible, Annapurna Leverage and Annapurna Convertible USD are all managed by Pius Fisch of Fisch Asset Management.The other name to come out was that of Asad Ali Khan and his wife Zahida, who was a co-account holder. Headlines Today scoured through the records sent to us by Rudolf Elmer and found out how Asad Ali Khan had siphoned off a huge amount of money to the Julius Baer Bank in Cayman Islands.A company in the name of Unicorp Services was incorporated in Cayman Islands.Its registered address is Post Box 1100, Kirk House, Grand Cayman Island, BWI.According to Elmers documents, the registration number of the company is 00233755.In the year 1999, Asad Ali Khan and Zahida were present for the dissolution of this company as directors of Unicorp Services in Cayman Islands.Elmers data also shows that the account was being managed by J.M.I. Gillani.The official address is: Banque Julius Baer, 2 Boulevard du Theatre, Case Postale, CH 1211, Geneva 11, Switzerland. Where Black money is being used? Election, Air travel , Tour, Restaurants, Land, Jewelery. Who is involved in Black Money? Senior bureaucrats (IAS,IPS officers), Ministers of Export-Import,Comerce, Chief Ministers, Top Industrialists , Horse Trader, Liquor Trader. 4000 kg gold sold in year 2010 in India. 144 nations signed UNCAC (United Nation Convention Against Corruption) but India is not signing because Indian Government is engaged in corruption. UNCAC Opened for signature from 9 December 2003 by the UN General Assembly & last date was 14 December 2005. Highly placed sources in New Delhi and Mumbai say much of the money held in Swiss banks, and other tax havens like the Bahamas, have been routed into the Indian stock exchanges through Participatory Note (PN) bought in Mauritius through front companies. Since these instruments are not registered to trade in Indian domestic capital markets, the investors names remain undisclosed. The route to take out the money is hawala and to bring it back is Participatory Note , says Hemen Kapadia, one of Mumbais top stock market analysts. Roughly 50-60 percent of FII investments, aggregating $85 billion till late 2009, were made through the Participatory Note route. And according to Kapadia, this route saw 75 percent traffic in the last few months. A worried market regulator, the Securities and Exchange Board of India (SEBI) is now learnt to have asked several FIIs to furnish details of the Participatory Note issued to their clients, but it has been consistently stonewalled. They will always win by citing client confidentiality agreements, and I doubt whether SEBI has the necessary legal teeth to probe further, Kapadia points out. India`s economic debthttp://www.indiabudget.nic.in/es200910/chapt2010/tab84.pdf FII investment in Indian stocks this year touched a record $18.13 billion ( Rs.82,360 crore), according to the SEBI website. In dollar terms the previous high was in 2007 ($17.65 billion) and in rupee terms in 2009. Stock market analysts say FII investment in rupee terms is lower because of appreciation in the Indian currency against

the dollar. The Sensex last year gained over 80 percent a figure it is likely to surpass this year. Not taking into account the recently concluded Coal India IPO, the FII bids amounted to Rs. 1.20 lakh crore. Some foreign entities that have placed large bids for Coal India through PNs include Citibank ($1 billion), Merrill Lynch ($2 billion) and Deutsche Bank ($3 billion). The Qualified Institutional Buyer (QIB) quota in the Coal India IPO that was oversubscribed 24 times was primarily due to intense FII interest. In fact, in 2007, when the then National Security Adviser MK Narayanan had spoken of terror funds routinely penetrating and manipulating the markets, he was hinting at PNs. Earlier, the RBI too had come out with a report expressing concern over the illegal traffic. At that time 89 percent of the funds invested by FIIs had come through the PN route, RBI data showed.According to recent estimates, roughly $200 billion four times the external debt of Pakistan is stashed away in Swiss banks and is now being withdrawn. A major area of vulnerability for us is the high consolidated public-debt to GDP ratio of over 70 percent (and) consolidated fiscal deficit, says the Governor of Reserve Bank of India (RBI), Mr. Yaga Venugopal Reddy. According to CIA world fact book, the Current account balance of India is MINUS 37,510,000,000 (minus) while China is the wealthiest country in the world with $ 426,100,000,000 (Plus) . India listed as 182 and China as no.1 . Money inflow in India is currently Rs 7,000 crore. Total number of registered corruption cases was 64,00,000 in 1989 , now in year 2010 is 1,64,00,000 . Hasan Ali 6 Billion Dollar swiss Bank accounthttp://timesofindia.indiatimes.com/india/Hasan-Alis-6bn-in-Swiss-accountsmissing/articleshow/7365076.cms Surely it`s time to Ban 1000 rupee notehttp://www.governancenow.com/news/regular-story/check-corruption-ban-rs1000-note Sources say that NGO is the main source of Black Money in India. http://www.hindustantimes.com/833-NGOs-blacklisted-for-misappropriation-offunds/H1-Article1-488589.aspx The GFI report says, From 1948 through 2008, India lost a total of $213 billion in illicit financial flows (or illegal capital flight). These illicit financial flows were generally the product of corruption, bribery and kickbacks, and criminal activities. The total of $213 billion is a misleading figure because the present value of Indias illicit financial flows is at least $462 billion, the GFI report explains, adding, This is based on the short-term US Treasury bill rate as a proxy for the rate of return on assets. The GFI (Global Financial Integrity) report points out that the total capital flight represents approximately 16.6 percent of IndiasGDP as of year-end 2008; that illicit financial flows out of India grew at 11.5 per cent per year; and, that India lost $16 billion per year between 2002-2006.The present value of illicit assets held abroad ($462 billion) accounts for approximately 72 per cent of Indias underground economy which has been estimated to account for 50 per cent of Indias GDP ($640 billion at the end of 2008). Just above a quarter of illicit assets are held domestically.The fact that

deposits in tax havens have increased from 36.4 per cent of illicit financial flows in 1995 to 54.2 per cent in 2009 tells its own story. Well if Swiss Bank cann`t give information to India then why Indian Government is not stopping money that they are coming from outside India. But how can a corrupt system do? We need to start a movement to pressurize the government to do so !! this is perhaps the only way, and a golden opportunity, to expose the high and mighty and weed out corruption !! Is India poor, who says? Ask Swiss banks With personal account deposit bank of $1500 billion in foreign reserve which have been misappropriated, an amount 13 times larger than the countrys foreign debt, one needs to rethink if India is a poor country?.

Govt to share black money details, but no names

Under pressure from parliamentarians, top finance ministry officials have told a parliamentary panel that it will share the status of prosecution and amount recovered from around 700 secret overseas bank accounts.
The government, however, made it clear that the names of the accounts holders cannot be revealed as there are binding agreements. The ministry officials pointed out that under tax treaties, names can only be disclosed at the time of filing of prosecution proceedings. The Income Tax department recently got a list of around 700 Indian entities that had accounts in Geneva. The information came after the government entered into agreement to unearth black money accounts with select foreign nations. In the meeting of parliamentary standing committee on finance, finance secretary RS Guajral and director enforcement Arun Mathur, initially said information cannot be revealed. But BJP's SS Ahluwalia and BJD's Bhartruhari Mahtab pointed out the opposition will make it a big issue in Parliament.

Black money estimates lack proof: Switzerland

Days after CBI Chief's statement that Indians are the largest depositors in Swiss banks, Switzerland on Thursday said such estimates and statistics lack evidence and are uncorroborated. In an unusual step, the Embassy of Switzerland here issued a press release saying, "it wishes to make a clarification in view of unsubstantiated media reports that have been recently published about Switzerland and Swiss Banks." But, the release, which did not mention CBI Chief's statement, said that Switzerland is not a tax haven.

"There have been several speculations about the amount of wealth held by Indians in Swiss Banks. Such estimates and statistics lack evidence and are uncorroborated," it said. At an Interpol programme here on February 13, CBI Director AP Singh had said: "It is estimated that around $500 billion of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians." Without indicating the source of the estimate of the illegal Indian money abroad, he had said India, in particular, has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein and British Virgin islands. While there have been various estimates of Indian black money stashed abroad, the statement by the CBI Director was significant that for the first time someone in authority in the country had come out with an estimate. "The Swiss government has been forthcoming in its co-operation with all foreign governments in cases of tax evasion as well as cases of tax fraud, that have been presented within the framework of bilateral treaties," the release said. The Double Taxation Avoidance Agreement (DTAA) between India and Switzerland provides a legal framework within which administrative assistance can be sought in particular cases of tax evasion or tax fraud, it added. The DTAA was revised in August 2010 and came into force on October 7, 2011. The revised treaty allows for exchange of information on tax fraud as well as on tax evasion cases. The earlier treaty did not include tax evasion, but only tax fraud. Swiss law makes a distinction between tax fraud and tax evasion. According to the release, the provisions of the revised agreement apply in India to income originating in tax years which start on or after April 1, 2012. In Switzerland, they apply to income originating in tax years which begin on or after January 1, 2012. "In the case of the exchange of information, the provisions apply to information referring to tax years which start on or after January 1, 2011," the release noted.

Illegal outflow of Rs 66,085 cr prevented: Pranab

The Government's efforts to deal with the menace of black money helped in checking tax evasion as alert revenue officials prevented illegal outflow of over Rs 66,000 crore by MNCs during the last fiscal. "The Directorate of Transfer Pricing in the Ministry (of Finance) helped in saving Rs 66,085 crore during the last year by timely stopping the illegal transfer of money through transfer pricing," Finance Minister Pranab Mukherjee said at a meeting of Central Direct Taxes Advisory Committee (CDTAC) in New Delhi on Wednesday.

Multinational companies use transfer pricing for products and services in cross-border trade between their related entities to shift profits to countries with low tax rates. In the process, countries lose tax revenue. The Ministry, according to sources, is contemplating introducing Advance Pricing Agreement (APA) mechanism in the upcoming budget to check transfer pricing disputes. The APA mechanism will allow companies to enter into agreements with the tax authorities to prevent future disputes with regard to pricing of products and services for the purpose of cross-border trade between related entities. The Finance Minister had earlier assured Parliament that the Government would come out with a White Paper on Black Money. The Government, Mukherjee said, has taken several steps to unearth black money and legislative measures to obtain banking information - through Double Taxation Avoidance Agreements (DTAA) and Tax Information Exchange Agreements (TIEA) - are being negotiated.

Indians have stashed over $ 500 billion in abroad: CBI

Indians are the largest depositors in banks abroad with an estimated $ 500 billion (nearly Rs 24.5 lakh crore) of illegal money stashed by them in tax havens, the CBI Director said on Monday. India, in particular, has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, British Virgin Islands etc. "It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians," CBI Director AP Singh said speaking at the inauguration of first Interpol global programme on anti-corruption and asset recovery. He said getting information about such illegal transactions is a time taking process as investigators have to peel each layer by sending judicial requests to the country where such deposits have been made. "53 per cent of the countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand which is ranked as the least corrupt country, Singapore ranked number five and Switzerland number seven," Singh said. He said there is a lack of political will in the leading tax haven states to part with the information because they are aware of the extent to which their economies have become "geared to this flow of illegal capitals from the poorer countries." The CBI Director said tracing, freezing, confiscation and repatriation of stolen assets is a legal challenge, a complex process which requires expertise and political will.

"Managing the asset recovery investigation is complex, time consuming, costly and most importantly requires expertise and political will. There are many obstacles to asset recovery. Not only is it a specialised legal process filled with delays and uncertainty, but there are also language barriers and a lack of trust when working with other countries," Singh said. He said global financial markets allow money to travel faster and further making tracking the money trail in such cases even more difficult which necessitates the organisation of such global training programs as they enhance the knowledge of investigators in tracking assets created out of corrupt and criminal acts. Singh said criminals are using the territorial issues of investigating agencies to their advantage by spreading their crimes to at least two countries and investing in a third. "In some of the recent important cases being investigated by the CBI such as 2G, CWG and Madhu Koda, we find that money is taken to Dubai/Singapore/Mauritius from where it goes to Switzerland and other such tax havens. "For criminals all it involves is setting up of a few shell companies and then making layered transfers from account to another in a matter of hours as there are no boundaries in banking transactions," he said. He said the World Bank estimates the cross border flow of money from criminal activities and tax evasion is around $ 1.5 trillion of which $ 40 billion is bribe paid to government servants in developing countries. Singh quoted the report to say that only $ 5 billion of this money has been repatriated during 15 years.

Black money: India signs multilateral agreement

Taking another step towards combating black money, India has signed a multi-lateral agreement with economic powers like France and Germany to check both tax evasion and avoidance. The agreement, convention on mutual administrative assistance in tax matters, is a multilateral agreement of 31 other nations which "promotes international co-operation while respecting the rights of taxpayers." The agreement has been signed under the aegis of the Organisation for Economic Cooperation and Development (OECD), a top global financial body, at its headquarters in Paris recently. A Finance Ministry official said the agreement was signed by CBDT official and Joint Secretary in foreign tax division of Finance Ministry Sanjay K Mishra along with OECD Deputy Secretary General Rintaro Tamakio.

"The convention provides for administrative co-operation between the parties in the assessment and collection of taxes with a view to combating tax avoidance and evasion," an OECD statement said in this regard. By joining the agreement, India and other 31 signatories, according to OECD, "send a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place." "India has moved very quickly since its commitment to the convention at the November G20 ceremony in Cannes and I expect it will be the first non-OECD G20 country for which the updated convention is in force", Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration said in a statement on Thursday. "With taxpayers increasingly operating on a global basis, tax authorities are moving from bilateral to multilateral cooperation and from exchange of information on request to other forms of co-operation. The convention is an effective and practical tool to help tax authorities in their everyday work," the statement said. The other members under the convention are Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, United Kingdom, and the United States.

Budget 2012: TDS on property, gold sales to check black money

To check the menace of black money, the government on Friday proposed a slew of measures, including I-T return assessment up to 16 years with regard to assets held abroad and tax deduction at source (TDS) on transfer of immovable property and gold purchase. "I propose a series of measures to deter the generation and use of unaccounted money," Finance Minister Pranab Mukherjee said while presenting the Budget for 2012-13. The government plans tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold, he said. Mukherjee also said he proposed to introduce a General Anti Avoidance Rule (GAAR) in order to "counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel". The minister also said he proposed to lay on the table of the House a White Paper on black money in the current session of Parliament. Besides, the Budget also proposes compulsory reporting requirement in case of assets held abroad and tax collection at source on trading in coal, lignite and iron ore. Government also plans tax collection at source on cash purchase of bullion or jewellery in excess of Rs 2 lakh.

It has also been proposed to "increase 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". Mukherjee proposed taxation of unexplained money, credits, investments, expenditures "at the highest rate of 30 per cent irrespective of the slab of income". The government also plans allowing Income Tax authorities to reopen assessment cases up to 16 years in relation to assets held abroad. Mukherjee also proposed a system of Advance Pricing Agreement (APA) to significantly bring down tax litigation and provide tax certainty to foreign investors. He said this was relevant in a globalised economy with expanding cross-border production chains and growing trade within entities of the same group. "Though, the provision for APA has been included in the DTC Bill, 2010, I propose to bring forward its implementation by introducing it in the Finance Bill, 2012, he said. Last year the government had embarked upon a five-pronged strategy to tackle the "malaise of generation and circulation of black money" and its illegitimate transfer outside India. The Finance Minister said, "Government has taken a number of proactive steps to implement this strategy".

Budget 2012: On black money

This is what Pranab Mukherjee said on Black Money in the Budget 2012 document. Last year I had outlined a five pronged strategy to tackle the malaise of generation and circulation of black money and its illegitimate transfer outside India. Government has taken a number of proactive steps to implement this strategy. As a result: - 82 Double Taxation Avoidance Agreements (DTAA) and 17 Tax Information Exchange Agreements (TIEA) have been finalised and information regarding bank accounts and assets held by Indians abroad has started flowing in. In some cases prosecution will be initiated; - Dedicated exchange of information cell for speedy exchange of tax information with treaty countries is fully functional in CBDT; - India became the 33rd signatory of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; and

- Directorate of Income Tax Criminal Investigation has been established in CBDT. I propose to lay on the table of the House a white paper on Black Money in the current session of Parliament.

Budget on blackmoney: TDS on property sale, gold buy likely

To check the menace of black money, the government today proposed a slew of measures, including I-T return assessment up to 16 years with regard to assets held abroad and tax deduction at source (TDS) on transfer of immovable property andgold purchase. "I propose a series of measures to deter the generation and use of unaccounted money," Finance Minister Pranab Mukherjee said while presenting the Budget for 2012-13. The government plans tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold, he said. Mukherjee also said he proposed to introduce a General Anti Avoidance Rule (GAAR) in order to "counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel". The minister also said he proposed to lay on the table of the House a White Paper on black money in the current session of Parliament. Besides, the Budget also proposes compulsory reporting requirement in case of assets held abroad and tax collection at source on trading in coal, lignite and iron ore. Government also plans tax collection at source on cash purchase of bullion or jewellery in excess of Rs 2 lakh. It has also been proposed to "increase 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". Mukherjee proposed taxation of unexplained money, credits, investments, expenditures "at the highest rate of 30 percent irrespective of the slab of income". The government also plans allowing Income Tax authorities to reopen assessment cases up to 16 years in relation to assets held abroad.

Budget: Govt to check black money

To check the menace of black money, the government on Friday (March 16) proposed a slew of measures, including I-T return assessment up to 16 years with regard to assets held abroad and tax deduction at source (TDS) on transfer of immovable property and gold purchase. "I propose a series of measures to deter the generation and use of unaccounted money," Finance Minister Pranab Mukherjee said while presenting the Budget for 2012-13. The government plans tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold, he said. Mukherjee also said he proposed to introduce a General Anti Avoidance Rule (GAAR) in order to "counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel". The minister also said he proposed to lay on the table of the House a White Paper on black money in the current session of Parliament. Besides, the Budget also proposes compulsory reporting requirement in case of assets held abroad and tax collection at source on trading in coal, lignite and iron ore. Government also plans tax collection at source on cash purchase of bullion or jewellery in excess of Rs 2 lakh. It has also been proposed to "increase 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". Mukherjee proposed taxation of unexplained money, credits, investments, expenditures "at the highest rate of 30 per cent irrespective of the slab of income". The government also plans allowing Income Tax authorities to reopen assessment cases up to 16 years in relation to assets held abroad. Mukherjee also proposed a system of Advance Pricing Agreement (APA) to significantly bring down tax litigation and provide tax certainty to foreign investors. He said this was relevant in a globalised economy with expanding cross-border production chains and growing trade within entities of the same group. "Though, the provision for APA has been included in the DTC Bill, 2010, I propose to bring forward its implementation by introducing it in the Finance Bill, 2012, he said. Last year the government had embarked upon a five-pronged strategy to tackle the "malaise of generation and circulation of black money" and its illegitimate transfer outside India. The Finance Minister said, "Government has taken a number of proactive steps to implement this strategy".