Professional Documents
Culture Documents
by the politicians, businessmen and celebrities from different fields in India since 1991 sums to a whopping estimation of Rs 2,100,000 crores plundering the wealth of our country. The GFI also adds that Indian economy has lost its monetary funds almost ranging from $450 billion to 1500 billion because of unaccounted flow of black money over the past decades after independence and a lump sum flowing into the accounts of banks in foreign every year. Major sources for this large accruement in the banks outside India have been through tax evasionadded to corruption and smuggling.
Corruption in various ministries generally misusing the minister posts to take privilege of
favoring for themselves or for members of the family or other considerations gainful for them.
Corruptions by the state and central government officials through agents and in the form of
indirect gifts.
A huge hoarding for black money is in politics and election campaigns by political parties.
Transactions in real estate business in which dealings of crores of money required and only
small amount is being shown in white, right from the registration of the document, market value, underestimation, difference between original value and registered value multiplicatively.
Investments in assets like gold, silver and antique collections whereas no records maintained.
Another source of widespread account bungling is in the area of constructions and builders.
The most important arena being the film industry where crores of money hidden as black
money.
Realizations from agrarian produce by the landlords that benefit from exemption of taxable
income in which no need of record required.
Importation of luxury cars from abroad by evading excise and customs duty.
Hawala transactions that have gone unnoticed.
Binami and overseas investments by politicians and big businessmen through several tax-free
havens.
Export and import transactions making under invoicing and malpractices in trade
merchandizing.
Capitation fees, unreleased donations and minting money through management quota by the
educational institutions not issuing genuine receipts.
Professionals in the IT industry, medicine, legal, travel and tourism, hospitality sectors
maintain no real records.
A source of speed money for pushing files in a complex system of functioning in public sectors
in the form of red tape maze and caverns of government rules and regulations.
Major contracts in defense, power, road, telecommunications, railway projects and tenders in
public sectors.
Stock market scandals, project costs manipulations, organ trafficking, under world mafia,
public distribution systems, export incentives, rebates, and under invoicing claimed by dubious groups of companies, unauthorized gambling, lottery schemes, holiday resorts and social clubs, and abuse of grants, subsidies and concessions provided by the government.
All over the world, corrupted politicians along with crooked businessmen are united together in the foreign countries to stash their outlawed income, to protect their assets and for laundering into white where these investments or assets have been not taxed or the least taxed. Precisely speaking, tax haven is a place or region (may be nation, state, city, or zone generally referred as jurisdiction) where least rate of taxation or no taxation at all prevails. Most of these jurisdictions impose no taxation on the income realized outside of their jurisdiction. Tax havens are of various categories. The simplest category has been no-tax tax haven whereas the jurisdiction has imposed no income tax, capital gain tax, or wealth tax of any kind and includes facilities under which outsiders can incorporate corporations, trusts, and foundations legally. Anguilla, the Bahamas, Bahrain, Bermuda, the Cayman Islands, Cook Islands, Djibouti, Turks and Caicose, and Vanuatu are belonging to this category. Second category of tax haven includes countries that levy no tax on foreign income of that jurisdiction. These countries do levy taxes on the incomes of individuals and corporations, which have been earned locally. The countries accomplishing this sort of legislation include Hong Kong, Liberia, Panama, Philippines, Venezuela, Jersey, Belize, Guernsey, Isle of Man, Gibraltar, and so on. Some jurisdictions impose low taxation or fixed rates of taxation normally a small amount of taxation on corporate income and do have double-taxation agreements with highly-taxation countries and countries falling under this category have been Cyprus, the British Virgin Islands, Liechtenstein, Oman, Switzerland, Jersey, Guernsey, and other countries. Furthermore, Luxembourg, the Netherlands, the Netherlands Antilles, Singapore, Antigua, Barbados, Grenada, Belize and Jamaica have legislation to offer some privileges of special incentives to off-shore companies plus tax reduction for international business companies as well.
The Bahamas
There has been no personal income tax, capital gains tax, and inheritance tax in the Bahamas islands, one of the richest Caribbean countries that mostly rely on tourism and international banking.
Bermuda
In Bermuda, there is no income tax on foreign earnings and foreign companies are allowed to be incorporated there with an exemption status. No income and capital gains taxes on businesses.
Dubai
In Dubai, no tax on income earned locally and from a rental property. No tax audits and no information shared with government agencies. However, Dubai has double taxation agreements with many countries, including India, needs to disclose fiscal information if required.
Cyprus
Being the most attractive investment haven in Europe, Cyprus has no capital gains tax, no withholding tax on international companies, but imposing a low corporate tax of 10%.
Luxembourg
An international financial center landlocked in northwestern Europe between France, Belgium and Germany that has been included in the 'grey list' of countries with controversial banking agreements by the G20, there has been no taxation bank interest, investment dividends, or capital gains for nonresidents in Luxembourg and most of tax evaded income has been in the form of trusts in this jurisdiction.
Mauritius
Ranking the top position amidst the countries in the FDI inflows to India, Mauritius imposes no tax on capital gains and has regulations of bilateral agreement on double taxation between India and Mauritius, but with the privilege of taking advantage of taxation loopholes.
Switzerland
The safest tax haven for anonymous and secured bank accounts in the foreign jurisdiction has been the Swiss banking accountings and this secrecy of the bank draws in huge investments to the country. No capital gains taxation in Switzerland, excluding the tax for professional equity and real estate
businessmen. It imposes wealth tax up to 1% of net assets and withholding a levy on all interest gained in the personal accounts of European Union residents in the Swiss bank.
Intensity of regulations
Numerous restrictions in public sectors in regard to controls, licensing and permit system in trades have paved the way for the evil of black money. The present licensing system contributes to corruption at all levels with import licenses dictating huge premium in the black market. At times, influential business firms invest funds in obtaining quotas or import licenses excessively beyond their requirements in order to barter at huge cash premiums. Likewise, licenses in industrial manufacturing sector have been exchanged at extremely enhanced prices.
Illegal activities
Important source of unaccounted money generates from illegal activities like large-scale smuggling of gold, diamond and numerous luxury products and drug trafficking.
holding accounts in the banks in rural and urban areas in our country. Their identifications cannot be traced out as our intelligence bureau and other agencies are not outfitted to the fullest extent. We would not be able to combat terrorism unless we cut short the unfavorable black currency in our economy.
Various measures implemented by the government to combat the menace of black currency
To estimate the exact amount of black money dispersed in the country is not an easy task. However, marauds and searches have been undertaken by the Indian Income Tax department officials at various times, only unearthing the least part. Following the recommendations by the Wanchoo Committee established in 1971, enactment of the Taxation Laws Amendment Act of 1975 has brought on various legislative provisions to preclude taxevasion and proliferation of unearthed black currency and stringent punishments have been provided for tax-evasion. A committee comprising experts called "Direct Tax Laws Committee" was appointed in June 1977 by the government to make simplification and rationalization of the direct tax laws since tax evasion cannot be controlled unless the tax regulations would be made simpler and rationalized. Furthermore, if the procedure of returns filing has been made simpler it would be easier for a layman to file the IT returns by himself without needing any support of lawyers and experts. Introduction of the voluntary disclosure scheme in 1975 by which individuals disclosing their black income voluntarily would not be imposed any penalty is an important measure implemented by the government to excavate the black money. Some of the currency notes of higher denomination also have been demonetized to curtail tax evasion to some extent. In December 1974, the conservation of Foreign Exchange and Prevention of Smuggling Activities Act was brought in to control smuggling activities in the country that has been a major headache for the Government. To combat black money, the Indian government proposed a new scheme of releasing a ten-year bond of the face value of Rs. 10,000 known as "special bearer bonds" through legislation for this purpose in 1981 that was issued by the President. This scheme provides exemption to the investor from prosecution as well as disclosure of the source of the money invested and recently a series of such bonds have been issued. A huge amount of black money was recovered in 1997 with the launching of another voluntary disclosure scheme with the tax rate in this scheme being cut down
to30%. The Dangli Committee on Controls and Subsidies in 1980, The Rajah Chelliah Committee and the National Institute of Public Finance and Policy in 1985 were some of other committees established in regard to this. Though a few of Wanchoo Committee recommendations being pursued by the government a great deal of transformation still needs to be taken place to curb this threat to economy.
Anti Corruption laws require to be amended so as to impose stringent penalty and prosecution
and to be implemented vigorously.
Contributions and expenses incurred by the political parties and the chairpersons have to be
closely watched and to ensure accountability.
Our existing functioning of government system has been outdated demanding rectifications
altogether.
Incoming and outgoing funds to NGOs and religious trusts must be regulated and transparent.
The list of defaulters and big borrowers has to be declared sporadically to avoid fouling
financial institutions in the long-run.
Modified and strict VAT to be incorporated right from the beginning of production and
distribution of commodities is required at this time.
All pending disputes need a quicker recovery irrespective of influences or political pressures
and court holidays to be lessened since lot of cases have been unfinished.
The provision to recall the candidate elected to the democracy or take the candidate out of
power in case the elected candidate is penalized for any corruption activity or any immoral practice should be added to the constitution.
Last but not the least, as an Indian national, we should be honest, not providing any room for
bribery, corruption and illegal activities before pointing out at others.
Black Economy
Definition "the sum total of transaction delibrately kept out of the books of accounts by household and business in the economy". by-- Dr.Raja chelliah committee. major govt steps and committees 1.Ayers committee - 1936 2.Income tax investigation committee - 1947
Black money
3.Taxation enquiry committee - 1953 4.Nicholas Kadler to Study Indian tax structure and tax evasion - 1956 5.direct tax administration enquiry committee - 1958 6.committee on prevention of corruption - 1964 7.monopoly enquiry committee - 1965 8.committee on departmental officers - 1968 9.direct taxation enquiry committee - tax evasion and black money - 1969 10.study team on leahage of foreign exchange - 1969 11.indirect txaes enquiry committee - 1970 12.direct taxation law committee - 1977 13.national institute of public finance and policy - 1985 14Suraj. B Guptha - 1987 15.madhu Dandavate - 1997 Sources of Black money 1.Evasion of taxation in various forms a.Personal income b.corporate tax 2.real estate transaction 3.Excise duty evasion 4.Cusoms duty evasion(import) 5.Evasion of sales tax 6.smuggling 7.from exports 8.from public expenditure 9.from private corporate investors 10.film industry 11.Proffesional income 12.Constructio(both private and public) 13.selling of licenses and permits 14.others gambling, bribes, high level corruption, financial transaction, HAWALA, prizing, coaching classes ect., causes of Black Economy 1.high rates of taxation 2.corruption business practice 3.stringent controls and regulations in income tax proceedings 4.political corruption 5.Bureaucratic corruption 6.prohobited trads like liqure, illegal grugs ect., 7.manipulation of Public expenditure 8.political fundings as development funds for the party and donations 9.increasindg inflation 10.deficiency of taxation system( based on party charisma and attract vote bank) 11.inadequacy of power to the tax authorities 12.ineffective enforcement of tax law 13. Lack of publicity of persons of black money. 14.black markets 15.Demonstartion effect.