Action against illegal stash in off-shore accounts was one of the biggest promises of Narendra Modi’s 2014 poll campaign and one of the points that the government was cornered on by the Opposition in recent weeks. So, in its first full-fledged Budget, the Modi government not only unveiled a slew of tough measures to crackdown on hidden assets, it also introduced a new law that could see hoarders getting up to 10 years of imprisonment.
Hard cash was almost made a bad word, to disincentive use of cash, and for any transaction-sale or purchase-above `1 lakh henceforth, PAN details will have to be furnished. The rigorous and long prison term is also aimed at bringing down cash dealings and tax evasion in real estate and similar high-value transactions.
Finance Minister Arun Jaitley announced, and it could be called one of the key points of Budget 2015, framing of new legislations to strike at the root of black money generation and stashing. The government, he said, will also take steps to incentivise use of credit and debit cards and put a cap on cash transactions.
“Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of `1 lakh. The third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions,” the FM said.
The thrust of his tax proposal seemed to be enacting “a new law to effectively deal with the problem of black money which eats into the vitals of our economy and society’’ and “to this end’’ he proposed “to introduce a Bill in the current Session of Parliament.” Under the proposed law, Jaitley explained concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with rigorous imprisonment of up to 10 years.
In addition to a prison term, the offence will be made “non-compoundable” and “offenders will not be permitted to approach the Settlement Commission”. So, no legal recourse if anyone is found to be on the wrong side of the fence.
Any moratorium, therefore, is out of question. On curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current session. “This law will enable confiscation of “benami” property and provide for prosecution, thus blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate,” Jaitley said. He also proposed to amend the Income-Tax Act to prohibit “acceptance or payment” of an advance of `20,000 or more in cash for purchase of property.
Problems of poverty and inequity, the FM said, cannot be eliminated unless generation of black money and its concealment is dealt with effectively and forcefully. So, black money could be seen as the centrepiece of all initiative to address financial woes.
The proposed new law will entail penalty of 300 per cent for concealment of income and assets, while not giving offenders permission to approach the Settlement Commission.
Also enforcement agencies will be given power to attach and confiscate unaccounted assets held abroad and launch prosecution against persons indulging in laundering black money.
Jaitley said the Foreign Exchange Management Act, 1999, would also be amended.
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