Black money: Government to turn up heat on holders of secret foreign accounts, assets

NEW DELHI: Individuals found possessing undisclosed foreign assets and bank accounts may soon face a very harsh regime. A panel on black money has pitched for reopening assessments of such taxpayers beyond the mandated six years and a tighter regulation for the real estate sector.

"A proposal for reopening assessments beyond six years is under consideration of the panel," said a government official who attended the fourth meeting of the panel held on Friday.

If the proposal is accepted by the government, such taxpayers would face penalty up to 300%, tax, interest and prosecution. Countries, including the United States, allow taxmen to reopen assessments for up to 10 years.

However, the panel chaired by the chairman Central Board of Direct Taxes, MC Joshi, is not in favour of a tax amnesty scheme as suggested by the India Inc and backed by an internal working group within the CBDT.

Industry had suggested a voluntary disclosure scheme for offshore assets at a meeting with the finance minister in August. Tax experts also support such a move.

"The governments, like the US, allow a window for voluntary disclosure but with full tax, interest and a certain fixed penalty and back it up with strong enforcement along with such a provision," said Amitabh Singh, partner, Ernst & Young.

The panel has also opposed any new law to deal with black money but has suggested tighter administration and faster prosecution.

“Manpower and other systems, such as sharing of intelligence among various agencies, needs to strengthened,” the official said. FM Pranab Mukherjee had set up a panel of tax officials on strengthening laws to curb the generation of black money, its illegal transfer abroad and its recovery and instituted a national study to quantify unaccounted wealth within and outside the country.

The issues of black money and corruption have taken centrestage in the political debate with Anna’s fast galvanizing public opinion. However, Baba Ramdev’s demand of capital punishment for perpetrators of black money has not found favour with the law ministry.