"No information can be made available unless there is a legal framework"
Even in the wake of heightened criticism of the government by the Opposition and the Supreme Court's sharp observations on its “inaction” on the black money issue, Finance Minister Pranab Mukherjee on Tuesday reiterated its stand that information received on funds stashed away by Indians in foreign banks and other tax havens could not be disclosed in the absence of a legal framework.
At a press conference convened here on the directive of Prime Minister Manmohan Singh as the issue attracted a “lot of attention” in the recent past, Mr. Mukherjee detailed the various proactive steps the government has taken — including formulation of a five-pronged strategy — to combat the menace of illicit funds generated both as a result of tax evasion and corruption.
The Minister dismissed the Opposition criticism that the United Progressive Alliance government was holding back information fearing that such disclosures could result in its fall.
“The government has nothing to hide. No question of [its] hiding. Let us understand the issue. No information can be made available unless there is a legal framework…No sovereign government is going to share information unless there is a legal framework,” Mr. Mukherjee said and took pains to explain why the government was not in a position to divulge information obtained from some foreign entities on black money stashed away abroad.
Asserting that the government had to work on the basis of “facts,” he pointed out that the Double Taxation Avoidance Agreements (DTAAs) and the Tax Information Exchange Agreements (TIEAs) were the “two instrumentalities” under which information on illicit funds could be obtained from sovereign governments and other “tax haven” jurisdictions.
India had DTAAs with 79 countries and modifications in such pacts were needed in 74 of them to broaden the scope of the article of exchange of information to include exchange of banking information. Already a total of 23 negotiations in line with international standards had been completed for DTAAs and 10 for TIEAs. In 31 cases, DTAA negotiations and in five cases, TIEA negotiations were in progress.
“But the problem is information which we have obtained has come under some conditions of secrecy. Today, if we disclose, tomorrow other countries will not give me the information raising an accusing finger that you do not meet international commitments,” Mr. Mukherjee said while noting “there is a way. As and when the Income Tax authorities are in a position to prosecute cases against tax evaders, you will come to know.”
Trying to drive home the extent of secrecy that is involved in such matters, he said: “Even I have no intention or authority of knowing the names [of those who have stashed away black money abroad]. The Income Tax officers have statutory powers under which they perform their duties and they are outside the purview of the administrative control of the Ministry”.
Mr. Mukherjee noted that to tackle the menace of illicit funds, the government had adopted a five-pronged strategy: joining the global crusade against black money; creating an appropriate legislative framework; setting up institutions for dealing with illicit funds; developing systems for implementation; and imparting skills to the manpower for effective action.
Asked whether the government was likely to come out with an amnesty scheme to bring unaccounted funds back home, the Minister said a group had been constituted to look into the matter while pointing out that even as such measures helped in getting some amounts, these were viewed as being “unfair” to the honest taxpayer.
‘No reliable estimates'
Mr. Mukherjee said there were no reliable estimates of black money inside and outside the country. While the interim recommendations of a BJP Task Force 2009 estimated such funds at anything between $ 500 billion and $1,400 billion, a recent study by Global Financial Integrity put the current value of illicit money outflow to be $ 462 billion.
“All these estimates are based on various unverifiable assumptions and approximations. Government has been seized of the matter and has constituted a multidisciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens.”
Stressing that the government's proactive steps resulted in substantial progress, he said: “We have detected an undisclosed income of about Rs 15,000 crore in last 18 months, due to focussed search operations by the Income Tax Department.” Alongside, during the same period, the Directorate of International Taxation collected taxes of Rs. 34,601 crore.
“These proactive steps led to an additional collection of taxes of Rs. 34,601 crore and detection of an additional income of Rs. 48,784 crore, on which taxes are being collected. I am confident that the results will be quite satisfactory in the days to come.”