According to the Income Tax Department and Revenue Secretary Hasmukh Adhia, the government has investigated and found undisclosed income in excess of Rs 16,000 crore, and they have seized roughly Rs 1,200 crore in assets since March 2014. Undisclosed income, or black money, is revenue made by a business without paid taxes. Tax evasion of this level is usually perpetrated through foreign banks and tax havens.
As per the Revenue Secretary’s statements: “In 2014-15 and 2015-16 (up until the date of the statement), the Income Tax Department by its enforcement actions has detected undisclosed income worth more than Rs 16,000 crore and seized assets worth Rs 1,200 crore. Prosecution has been filed in 774 cases.”
A large part of the tax evasion was declared thanks to the drafting and planned implementation of the Black Money Act, which is set to take effect on December 31st, 2015.
Compliance Window Netted Tax Evaders
Several methods were employed to catch and identify people who would store their wealth abroad in an attempt to avoid taxes, although the Undisclosed Foreign Income and Assets and Imposition of Tax Act was the one that may have had the most effect.
As reported by Money Bhaskar on latest income tax news, the government allowed for a compliance window from now until the implementation of the act in 2016, so that anyone with illegal foreign wealth was given the go-ahead to pay their due income taxes alongside a penalty of 60 percent, or else face the consequences of the upcoming law’s harsh penal provisions. Within a three-month window leading up the end of the year, over six hundred declarations were made, and over Rs 4,160 crore in illegal money was collected.
Project Insight To Being Next Year
One of the ways the government plans to track sizeable sums is through the use of a PAN, or a Permanent Account Number, for all transactions above a certain legal limit. Furthermore, the government promises “enforcement action” when evidence of tax evasion is definite.
According to the Tax Justice Network, there are two reports for the annual losses that developing countries suffer through tax evasion: US$100 billion according to the UNCTAD World Investment Report, and up to two times as much according to the IMF.
“The present government is very serious on the issue of black money. Various pronouncements of Prime Minister Narendra Modi and Finance Minister Arun Jaitley have made it very clear that this government does not want to spare any effort to bring people with black money to book,” stated the Revenue Secretary. “The last date for paying income tax for those people who made disclosures under the Black Money Act is December 31, 2015. We are hopeful of getting approximately Rs 2,500 crore as tax in the current year.”
Indian Government to Convene with Foreign Governments
Starting in 2016, the government will also make an attempt to discuss the issue of black money with foreign governments in an attempt to curb its effects. Under the agreement of the Foreign Account Tax Compliance Act, India is already getting information from some countries such as the United States.
“Our attempt to get more information from governments of other countries about the resident tax payers is likely to get more traction in 2016,” the Revenue Secretary stated.