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Q. Hunt on black money: Comment on Government plan to launch a publicity campaign to motivate Indians with hidden assets in the country to come clean.
Jun 27, 2016 Related to : GS Paper - 3 & 2

Ans :

Introduction-

Black money refers to funds earned on the black market, on which income and other taxes have not been paid. Though there are several estimates, but exact total amount of black money by Indians is unknown.

Issue-

Recently government has planned to launch a publicity campaign to motivate Indians with hidden assets in the country to come clean. Also about Rs 13,000 crore black money has been unearthed by government recently from overseas bank accounts.

Analysis-

  • The publicity campaign could motivate people to make use of the Income Declaration Scheme 2016, which allows them to pay tax, surcharge and penalty adding up to 45% on their past undisclosed income.

  • If they fail to declare their income by the closing date of Income Declaration Scheme 2016, then they face dire consequences. 

  • In this way it is like carrot and stick policy. It encourages those who want to declare their income and pay required tax, surcharges and penalty. Similarly those who don’t want declare may face fear of dire consequences.

  • In the present circumstances, the government's move to crackdown on those stashing undeclared income in overseas bank accounts is welcome move. 

Suggestion-

  • Informing and guiding taxpayers makes sense, but the tax administration must also ensure that the rights of the declarants are protected.

  • Earlier amnesty schemes are failed due to the lack of trust on penalties after coming clean on concealed incomes. Bridging the trust deficit holds the key to the success of the ongoing scheme.

  • There is urgent need to end the systemic demand for black money in India. This process needs to start with political parties by making their funding transparent and legitimate. This will help to curb most of the black money.

Conclusion-

Black money is most problematic issues for Indian economy, as creates parallel economy with unaccounted money. Hence curbing of black money is need of the hour for Indian economy. In this direction government’s amnesty schemes and plan to launch a publicity campaign to motivate Indians with hidden assets in the country to come clean are indeed need of the hour. But these initiatives are not suffice to curb the black money, there is need to end the systemic demand for black money in India, for that government must launch more serious actions. 


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