In Chapter III of Second SIT report, the SIT has recommended as under:

“Financial Action Task Force (FATF) on money laundering recommends ‘tax crimes’ to be made a predicate offence so that action can be taken under Prevention of Money Laundering Act, 2002. There are more than 25 countries in the world which have made ‘tax crimes’ as a predicate offence. The Government needs to seriously examine the issue and take steps to make ‘tax crimes’ as a predicate offence. To prevent any hardship to salaried or small tax payer, a high threshold of say, more than ₹ 50 lakh of tax evasion could be considered as being a predicate offence”.

This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Rajya Sabha.

Tax crimes as predicate offence would enable PMLA action while protecting small taxpayers with a proposed high threshold. Recommendation to treat tax evasion as a predicate offence enabling action under the Prevention of Money Laundering Act, aligning domestic law with international practice. The proposal urges legislative examination to permit PMLA proceedings where tax crimes underpin laundering suspicions, while protecting salaried and small taxpayers through a high de minimis threshold so that only substantial, deliberate tax evasion cases trigger the enhanced investigative and prosecutorial regime.