The government on Monday announced setting up of a special wing — Directorate of Income Tax (Criminal Investigation) — to investigate criminal offences under direct tax laws.

The DCI, to be set up with immediate effect, would collect information about persons and transactions connected with criminal activities and initiate prosecution proceedings against them.

“The DCI will perform functions in respect to criminal matters having any financial implication punishable as an offence under any direct tax law,” the Finance Ministry said.

The DCI, to be a part of the Central Board of Direct Taxes (CBDT), will seek and collect information about persons and transactions suspected to be connected with criminal activities “having cross—border, inter—state or international ramifications, that pose a threat to national security and are punishable under the direct tax laws“.

The directorate will also investigate the source and use of funds involved in such criminal activities and file prosecution complaint in competent courts.

Service of experts

The DCI could also hire the services of special prosecutors and other experts for pursuing a prosecution complaint, the Finance Ministry said.

Apart from agreement with different central or state agencies in India, it could also enter into pacts for sharing of information or cooperation with foreign governments.

Tax and auditing firm Deloitte Haskins & Sells said the setting up of a wing to tackle problems of terror network funding, cross border tax evasion and money laundering cases is the need of the hour and would be an extremely welcome move.

“However, for it to have a real impact, it is key that the Directorate be vested with independent powers,” M Lakshminarayanan, Leader—Tax, Deloitte Haskins & Sells said.

For effective prosecution, the agency will also execute “appropriate witness protection programmes“.

The directorate has been authorised to coordinate with and extend necessary expert and logistical support to any other domestic intelligence agency probing crimes having ramification of threat to national security.

The special wing will be headed by a Director General of Income Tax (Criminal Investigation) in the rank of Chief Commissioner of Income Tax, and will be located in New Delhi.

The wing will have eight Directors of Income Tax (Criminal Investigation) located in Delhi, Chandigarh, Jaipur, Ahmedabad, Mumbai, Chennai, Kolkata and Lucknow.

The government has announced a five—pronged strategy to tackle the menace of illicit funds, including joining global crusade against black money and creating appropriate legislative framework.

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