Press Information Bureau

Government of India

Ministry of Finance

20-December-2012 18:40 IST

The Central Government has been vigorously pursuing the cases of black money stashed abroad and in bringing them back. For this purpose, a five pronged strategy has been adopted which is as follows:

i) Joining the global crusade against ‘black money’ (for example out action in G 20, Global Forum on Transparency and Exchange of Information for Tax purposes, Task Force on Financial Integrity and Economic Development, Financial Action Task Force, UN, OECD, etc.);

ii) Creating an appropriate legislative framework: (various anti tax evasion measures legislated in existing Act and proposed in the DTC, New DTAAs and TIEAs, amend existing DTAAs);

iii) Setting up institutions for dealing with illicit funds (10 Income Tax Overseas Units, dedicated computerized Exchange of Information [EIO Unit], FIU);

iv) Developing systems for implementation (ne manpower policy); and

v) Imparting skills to the manpower for effective action (constant training for skill development).

While these measures have started yielding results, Government is facing difficulties to bring back the money deposited with the Foreign/Swiss banks on various grounds such as non-availability of official estimates of black money stashed abroad, lack of information on the identity of the account holders who possess illicit money in foreign banks, the prohibition of fishing expedition in the tax treaties, etc.

Drive against tax evasion is a continuous and ongoing process. The Income Tax Department takes several punitive and deterrent steps to unearth unaccounted money and curb tax evasion. These include scrutiny of tax returns, surveys, search and seizure actions, imposition of penalty and launching of prosecution in appropriate cases. Information technology is also used in a systematic way for collection and collation of information to take action against tax evaders.

This was stated by the Minister of State for Finance Shri S.S. Palanimanickam in a written reply to a question in the Rajya Sabha today.

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DSM/RS/ka

Five pronged anti black money strategy emphasizes international exchange, legislative reform and institutional enforcement capacities. A coordinated regulatory initiative seeks recovery of illicit foreign funds via a five-pronged strategy: international cooperation and information exchange; strengthened legislative measures and treaty amendments; creation of specialized institutions and information units; development of operational systems and manpower policy; and continuous training. Enforcement is hindered by lack of official estimates of assets abroad, limited identity information for account holders, and treaty prohibitions on fishing expeditions, while domestic tax administration pursues scrutiny, searches, penalties, prosecutions and IT driven information collation.