Amid the hue and cry on the “black money” circulating within the country and abroad, Finance Minister Pranab Mukherjee on Friday announced the setting up of a group to quantify the black money being generated.
“As soon as the report is available, I will share it with you,” he said replying to the debate on the general budget in the Lok Sabha. There was no quantum specified by anybody regarding black money generated in the country. Various figures were being floated.
“BJP estimate high”
While the BJP task force of 2009, in its interim recommendations, had estimated black money to be in the range of $500 billion-$1,400 billion, which he felt was high, another figure released by the Global Financial Integrity, for the period from 1948 to 2008, “by juxtaposing the exchange fluctuations” claimed that it could be about $462 billion.
Any amount of anxiety would not bring the money back to India, he said, adding that “we live in a society which is governed by the rule of law; and we shall have to proceed as per law. Simply, if you want to hang somebody, do not blame me.”
Mr. Mukherjee said the Income-Tax department, during its search and seizure operations, recovered undisclosed income of Rs.25,000 crore in the last 24 months.
“Of that, Rs.7,000 crore of additional taxes have been realised.” Besides through direct ways of international taxation, an additional Rs.34,601 crore was brought to the government's kitty.
Those indulging in financial crimes were resorting to new mechanisms and adopting latest technologies, and the government was able to detect about Rs.33,784 crore through the transfer pricing mechanism. “In other words, this much amount of money has been prevented from being siphoned out of our country.”
Transfer pricing is a technique where parent companies sell goods and services to subsidiary entities at an inflated price to deliberately reduce profits and tax liability. The law requires that goods and services should be sold to subsidiary companies at arm's length price — the price at which goods are traded between unconnected companies.
Mr. Mukherjee said that to deal with the black money menace, India had completed Double Taxation Avoidance Agreement (DTAA) renegotiations with 23 countries, including Switzerland. “Of the 65 countries, we have been able to complete the DTAA with 23 countries.”
However, he said information from Switzerland could be exchanged after completion of ratification process. “...the agreement which I have signed with my counterpart in the Swiss government in August, they are still taking time for ratification and when it will be ratified from April 1 this year we will get the information,” he said.