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SIT Propose Several Steps to Curb Black Money
Dec 24, 2014

In the first major disclosure on black money, 339 Indians have been found to have stashed Rs. 4,479 crore in Swiss banks, while domestic unaccounted wealth to the tune of Rs. 14,958 crore has been traced, even as the SIT recommended stringent measures to check the menace.

The Supreme Court-constituted Special Investigation Team (SIT) has recommended amendments to laws to provide for confiscation of domestic properties of those with illicit assets abroad and making tax evasion of over Rs. 50 lakh a predicate offence or a serious crime to facilitate necessary action under the Prevention of Money Laundering Act (PMLA).

After probing into a list of 628 Indians, who figured on a list of account holders in HSBC's Geneva branch that India got from the French government, the SIT has said that prosecution has begun against 79 entities.

Out of these, no balance has been found in case of 289 accounts. Out of the 628 persons, 201 are either non-residents or non-traceable, leaving 427 persons cases as actionable cases. While the total amount involved in these cases is about Rs. 4,479 crore, the income tax department has finalized assessment for 79 entities involving 339 cases. An amount of Rs. 2,926 crore has been brought to tax towards the undisclosed balances in the accounts relating to these persons and taxes along with interest at applicable rates have been levied.

The 13 recommendations made by the SIT also include imposing a threshold of Rs. 10-15 lakh on holding and transporting cash to check the black money menace.

Major Recommendations

  • Setting up of an institutional mechanism to examine mismatch between export/import data with corresponding data of other countries on a quarterly basis to unearth black money.

  • In case it is found that an individual or entity owns a property abroad in violation of the law, a provision should be made in the FEMA to provide for seizure and confiscation of property of equivalent value within the country.

  • Establishment of a central KYC (Know Your Customer) registry to deal with the problem of multiple identities of an individual in financial transactions.

  • To check black money menace, the SIT cited the examples of European countries to say that there should be a limit on transportation and holding of cash.

  • The shipping bills should include the international market price of goods and machinery sought to be exported.

  • There should be a dynamic interaction between different stakeholders like reporting entities, Financial Intelligence Unit and law enforcement authorities.

  • In cases where ED has attached a property and there are income tax dues to be collected, the SIT said that the former should be open to recovering dues from the attached property.

  • Setting up of a central KYC registry to weed out use of multiple identities for financial transactions.

  • At least five additional chief judicial magistrates courts should be set up in Mumbai to deal with 5000 pending IT prosecution cases.


While suggesting steps like curbs on cash transportation beyond a level and mandatory quoting of PAN for cash and cheque payments over Rs. 1 lakh, the SIT has flagged off mining, Ponzi schemes, iron ore exports, misuse of export-import route as major areas prone to black money transactions.

 


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