Government to use ‘red flags’ to track black money at home

NEW DELHI: While signing a global treaty on exchange of information to track black money, the government is also setting its house in order to act against those stashing illicit wealth within the country. The move will put certain segments of the economy that are prone to underreporting income under the tax scanner.

As a first step, the revenue department has decided to streamline information-sharing between the six investigative wings under it — from the Enforcement Directorate, Directorate of Revenue Intelligence to the Financial Intelligence Unit (FIU) — by developing what officials described as 'red flag' indicators. The indicators are an illustrative list of transactions to alert the probe wings, including the Central Economic Intelligence Bureau (CEIB), the CBDT's investigative wing, and central excise intelligence, regarding the possibility of use of black money, an official explained.

Sources said a lot of information was generated from these wings but often got lost due to the large volumes as also lack of coordination. "There are certain kinds of transactions that will raise suspicion with, say, DRI or ED, which others may not catch. The new system will help plug the gap," an official said.

Authorities added that enormous amount of information was available with two agencies in particular, the FIU that receives suspicious transactions report from banks, and CEIB that has a wider ambit dealing with issues such as smuggling, hawala and foreign exchange violations.

Recently, finance minister Arun Jaitley had told top I-T officials that they should train their eyes on domestic black money as well. When contacted, revenue secretary Shaktikanta Das confirmed the move and said, "The mechanism will further facilitate and make the process more worthwhile. At the same time, it will be non-intrusive and is aimed at building a solid case before proceeding against anyone."

Although certain economic activities are on the radar, Das declined to comment on the issue as the government is keen to ensure that business confidence stays intact and the recent initiatives on a non-intrusive tax regime is not derailed.

At the same time, the BJP government is keen to ensure that it meets its the poll promise of unearthing black money.