Union Government has submitted the names of 627 foreign account holders to Supreme Court and has said that half of them are resident Indians who could be prosecuted under Income Tax laws and rest of them are NRIs. If one knows the pace of investigation it takes before the actual culprits are caught, then there is nothing to celebrate in handing over the names to Apex Court. Already many of the defaulters have paid the income tax and regularised their income. The current burst of activities to get rid of unaccounted money can be traced to G-20 summit in London in 2009. India in isolation cannot fight but will have to follow global agreements. However, black money has become a political issue with parties trading charges and counter charges on having nexus with big business houses and hordes stashed away in Swiss banks. Curbing black money has an overseas component and India needs assistance from other countries. Supreme Court directions on sharing information of overseas accounts has raised worries about India’s commitment to the confidentiality clause in various tax treaties and may impact remittances from abroad. Not only this any move to reveal the names in public without launching prosecution will choke government’s efforts to get more information about stashing the ill gotten wealth abroad from other tax jurisdiction. This would also hamper the process of signing of Foreign Account Tax Compliance Act (FATCA) with US, which contains a confidentiality clause. India and other countries have to sign the inter-government agreement by 31st December to assure that the tax liability information is passed over to the signatory country. A formal signing of FATCA, which was initiated by the UPA Government, is yet to take place. Government rather looking for foreign land should battle out the sources within the country and bring in more transparency in transactions through banks. Tax rates are needed to be moderated so that more people disclose their source of income. There is also need to cut down in stamp duty in real estate transactions which can stem the rot at an early stage to some extent.
