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One of the first legal principles is that the any law ought to be prospective in its application; not retrospective.

Black Money – Do we need a new Law ?

Whether we need a new “comprehensive law to deal with black money parked abroad” as proposed by Budget 2015. Or would existing laws backed by intent suffice?

Black Money – Will Agreement with USA help?

Regulatory oversight allowed illicit money transactions in our financial markets.

The Writ Petition filed by the NDA Government in mid-October consists of two parts. The first part deals with the issue of Double Taxation Avoidance Agreement [DTAA], the information obtained from Liechtenstein through Germany and confidentiality obligations of Indian Government under the said DTAA.

I had dealt extensively on this issue in my article titled “Black Money Issue degenerating into a farce?”

The second part relates to the proposed Inter Governmental Agreement [IGA] with USA. Under the proposed agreement, “information” provided by financial institutions in India will be automatically transmitted to USA with reciprocal obligations for financial institutions in USA to transmit “information” to India.

Now, two questions arise: what constitutes “information” and two, why should such information exchanged be treated as “confidential.”

Black Money Saga – NDA Government misled?

Why this extensive charade in the first place that ensured that the Modi Government ended up with egg on its face?

It was just a fortnight back when it seemed everything was going well for the NDA Government. The Prime Minister had well and truly settled in office. His cabinet colleagues were slowly but surely getting on top of their Ministries. Whatever was left of the Opposition was pulverised by the average voter as evidenced by the recent election results in two States that went to polls.

Inflation was heading southwards. Business optimism was returning, albeit slowly. Green shoots were definitely visible. Pink papers shed their usual paranoia and began to talk purposefully. Even critics of the Prime Minister were grudgingly approving of him and his Government. Internationally, the PM was seen as a new star of Asia and not merely of India.

But the NDA Government suddenly seemed to be possessed by a death wish. In a move that would shame a Kamikaze warrior, the NDA Government, inexplicably and without any provocation, filed a writ in the Hon’ble Supreme Court last fortnight seeking to hold back the names of those who had bank accounts in tax havens.

Moneys parked in secret accounts in tax havens is not a mere tax evasion issue.

“It is respectfully submitted that due to increasing globalisation, it has become easier for taxpayers to make, hold and manage investments through financial institutions outside of their country of residence. Therefore, vast amounts of money are kept offshore and go untaxed to the extent that tax payers fail to comply with tax obligations in their home country.”

Now, this is not a lecturer of finance in High School pointing out to his student on the downsides of global financial architecture.

Rather, this is the preliminary submission of Government of India in a Writ filed last week with the Hon’ble SC. It is apparent from this submission that the government views the issue of money parked in secret accounts in tax havens solely as tax issue; to be sorted out by the tax man through the tax laws.

More to the point, extant global financial architecture facilitates transfer of illicit money through the Hawala route first to a Tax Haven, only to launder it in specialised locations like London.

"There are 42,800 persons - let me repeat, only 42,800 persons - who admitted to a taxable income exceeding Rs 1 crore per year." That was the then Finance Minister [FM] Mr. P Chidambaram in para 126 in his Budget speech of 2013-14 in February 2013.

In a way this statement of the then FM was a candid confession of the complete failure of our Income-Tax department, revenue intelligence and associated authorities in fighting the menace of Black Money within the national economy.

Will The SIT On Black Money Help?

Will The SIT On Black Money Help?Join Ayaz Memon, M R Venkatesh & Govindraj Ethiraj On #IndiaHangout


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