Finance Minister Arun Jaitley on Monday said India will not be allowed to become a tax haven and that the government would provide a reasonable window of compliance to those who have stashed away ill-gotten money overseas to come clean.
“India needs a stable tax regime, not a tax haven... The taxes that are due must be paid,” the finance minister said at the annual session of the Confederation of Indian Industry (CII) here, adding: “A reasonable compliance rule would come.”
He was alluding to the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, that was tabled by him in the Lok Sabha last month that calls for a 300 per cent penalty on the quantum of black money abroad along with rigorous imprisonment of up to 3-10 years for perpetrators.
At the same time, the bill also has some amnesty provisions to bring back such money back from overseas, allowing people to declare such assets within a prescribed time period, pay some tax on it and retain the remaining amount.
It provides for tax to be charged at 30 percent of the undisclosed assets outside India as also a penalty of 100 percent of such tax, taking the effective rate of tax and penalty to 60 percent, leaving room for people to retain 40 percent of such declared assets.
India has no official estimates of illegal money stashed away overseas, but the unofficial ones range from $466 billion to $1.4 trillion.