New Delhi: A day after Finance Minister Arun Jaitley presented his first full-fledged Budget, the Narendra Modi government took the first step towards cracking down on black money. The Centre will soon introduce one time compliance opportunity, said Finance Ministry sources on Sunday.
Sources said the government expected huge revenue collection with the disclosure scheme, adding that if foreign assets or accounts are discovered after the scheme, individuals could land in jail.
Centre plans tougher punishments including jail terms of up to 10 years for those who hide undeclared cash outside the country and for the banks and advisers who help them, as it tries to bring back illicit billions stashed abroad.
The hidden cash "eats into the vitals of our economy and society," Jaitley said while presenting the Union Budget on Saturday. "The problems of poverty and inequity cannot be eliminated unless generation of black money and its concealment is dealt with effectively and forcefully."
Illegal deposits abroad cost India billions of dollars in lost revenue and Prime Minister Narendra Modi's government has promised to change laws and enact new measures to bring back such funds, known in India as 'black money'.
Evading tax on foreign assets will carry a jail sentence of up to 10 years, under the government's proposed changes, while failing to disclose assets adequately will be punishable by up to 7 years.
While presenting the Budget on Saturday, Jaitley said, "Foreign Exchange Management Act is being amended to the affect that if any foreign exchange, foreign security or immovable gets taken outside India is held in contravention of the provisions of the act , then action can be taken for seizure and eventual confiscation of assets of equivalent value in India. With regard to curbing domestic black money, a new and more comprehensive bill, the benami transaction prohibition bill will be introduced in the current session of Parliament. The law will enable the confiscation of benami property. "
India has also struck a deal with Swiss authorities, which will provide information for cases being investigated at home. The two sides have begun talks on an automatic exchange of information, Jaitley said.
Earlier in February 2015, Indian tax officials searched the Mumbai headquarters of HSBC Holdings as part of a broader probe related to allegations the bank's Swiss business helped clients dodge taxes. India has been the only Asian country to aggressively investigate HSBC over the matter.
The black money changes come in a full-year Budget that seeks to encourage investment in India with lower corporate tax eventually and simpler process, but also to increase fiscal revenue.
New provisions will be put in place soon, said sources.
(With additional information from Reuters)
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