- The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, or BMA, which was brought into tax undisclosed foreign income and assets, came into force on April 1, 2016.
- This will ensure that other Vijay Mallyas and Nirav Modis of the country come into public and are punished accordingly for their crimes.
- The steps taken by the government to curb black money at home, the actions taken to bring black money stashed in foreign countries or coming through fraudulent transactions from countries like the United Kingdom, Mauritius, and Switzerland will lead to India becoming a rule-based capitalist economy with a very high trust factor.
Indians who held secret bank accounts in foreign countries are in trouble as Foreign Assets Investigation Unit (FAIU) has asked all of them to share details of offshore bank accounts since 2001. Although people who have clean dealings have no reason to worry because holding a bank account in a foreign country is not illegal, those who used this to evade taxes and transfer black money are the ones who are in trouble.
A lot of people used secret bank accounts to purchase houses and avail of other luxuries through illegally funnelled black money.
“Data gathered under the Act can be used for invocation of Black Money Act,” said Ashish Mehta, partner at the law firm Khaitan & Co. “While much would depend on the peculiarity of facts in each case, some would argue that persons investigated have already been taxed in proceedings under the I-T Act, in which case the same assets or incomes cannot be assessed again under the Black Money Act.”
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, or BMA, which was brought into tax undisclosed foreign income and assets, came into force on April 1, 2016.
A number of people in the country, including corporate executives, industrialists, and most importantly politicians, used to keep secret bank accounts in foreign countries to funnel black money. As the IT department has asked for details of all transactions through foreign accounts, a lot of these people would come under the radar of the black money act.
This will ensure that other Vijay Mallyas and Nirav Modis of the country come into public and are punished accordingly for their crimes. This will also lead to massive tax revenues for the government from the people who have undisclosed income/properties.
In the last seven years, the Modi government has taken the following decision to collect the taxes on black money at home and abroad. The first step the government took to curb black money was through Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, under which it provided a one-time window for compliance from July 1 to September 30 in 2015 — to those who had undisclosed foreign assets.
Under this scheme, Rs 4,100 crore worth of assets in total was disclosed by 650 people. After this, the government brought Income Declaration Scheme (IDS) in which anyone who had not disclosed their income or assets honestly in the previous assessment year got a chance to disclose it.
The government amended the Benami property act in 2016 to crackdown the Benami transaction. According to Benami Property Act, a property bought by an individual, not under his/her name (or family’s name) is Benami property which includes buying assets of any kind — movable, immovable, tangible, intangible. 24 dedicated Benami Prohibition Units were set up by The Income Tax (IT) department to clamp the Benami transactions.
Another important decision taken by the government to curb black money was to ring the death knell to shell companies. In the case of Nirav Modi’s fraud, almost 150 shell companies were identified. The shell companies in the Nirav Modi scam were registered in the name of his family members. The Nirav Modi scam cost billions of dollars to the Indian public sector banks with PNB alone losing $1.77 billion. The government and the Reserve Bank of India (RBI) have also begun discussions about making a database of all electronic payment transactions. This will help in establishing a money trail to probe money laundering cases and operations of shell companies.
The steps taken by the government to curb black money at home, the actions taken to bring black money stashed in foreign countries or coming through fraudulent transactions from countries like the United Kingdom, Mauritius, and Switzerland will lead to India becoming a rule-based capitalist economy with a very high trust factor. In the last few years, the tax revenues have already improved, and the government is ensuring that there is fear among all classes of the society to not evade taxes.
