Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Is the Black Money Issue Getting Tackled?
Mon, 4 Jul Pre-Open

Recently, Revenue Secretary Mr Adhia stated that there are only 0.15 million individuals whose total income would be above Rs 5 million. This means, in a country of close to 1.25 bn people, only 0.012% of the population has an income of over Rs 5 million. But this number is way behind than the government's estimates.

Mr Jaitley, tried to address this issue in the Union Budget 2016. He proposed a limited period Compliance Window for domestic taxpayers to declare undisclosed income by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, This adds up to payment of around 45% to government for the undisclosed income.

So, if one has black money, and is willing to pay 15% extra to the government, over and above the top tax rate, the laws of the land won't apply on such a person. Meaning, there will be no scrutiny or enquiry regarding the income declared in these declarations under the Income Tax Act or the Wealth Tax Act and the declarants will have immunity from prosecution. The compliance window is from 1 June to 30 September 2016. Looking at the lower penalty provisions, there is a high probability that a considerable chunk of black money lands in the hands of the government.

However, previous efforts by the government to recover black money from undisclosed foreign assets had failed miserably. In May 2015, the Parliament had passed the Undisclosed Foreign Income and Assets (Imposition of New Tax) Act.

This window allowed those with undisclosed foreign assets and income (or foreign black money) to declare them and pay a tax of 30% and a penalty of 30%. The window was closed on 30 September 2015.

Taking advantage of this compliance window, only 638 declarants confirmed assets and income of Rs 41.5 billion was collected in total. The money recovered was not even enough to buy a scoop of ice-cream for every Indian as compared to the claims of buying everyone a new car. Maybe, the scheme failed on the back of high penal provisions of 30% over and above the normal tax rate.

Having said that, Switzerland has begun sharing foreign client details on evidence of wrongdoings. Further, it has agreed to expand its cooperation on India's fight against black money and expects to sign a new pact for automatic information exchange 2018 onwards. Further, a team of Indian officials too are expected to visit Switzerland soon to expedite the pending information requests about suspected illicit accounts of Indians in Swiss banks.

Moreover, money held by Indians in Swiss banks has nearly fallen by one-third to a record low of Rs 83.9 billion at the end of 2015. This figure authenticates that there has been a considerable success to bring back black money from the Swiss banks. Recently, the taxmen have detected Rs 81.8 billion of undisclosed income against those whose names figured in the HSBC Geneva list. Out of the total 628 cases under this list, the department got "actionable" evidence in 415 cases. Hence, lately there has been a positive development on the black money issue.

The recently introduced scheme in the Union Budget coupled with increased sharing of wrongdoings from the Swiss authorities will help to bring a clampdown on the black money issue which has been one of the prime focus of the Modi government.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "Is the Black Money Issue Getting Tackled?". Click here!


Views on News

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

Parag Parikh Conservative Hybrid Fund: Should You Invest in Higher Debt Allocation? (Outside View)

May 14, 2021

PersonalFN analyses the features of Parag Parikh Conservative Hybrid Fund and explains the potential this fund has to offer to its investors.

Die Hard 4.0 Redux? (Fast Profits Daily)

May 14, 2021

A Hollywood style cyber-attack has caused shockwaves across financial markets.

What Godrej Consumer's 22% Single-Day Gain Tells About My Blueprint (Profit Hunter)

May 14, 2021

The company's FY21 earnings performance turned out better than my estimates but...

More Views on News

Most Popular

My Secret to Find Breakthrough Stocks (Fast Profits Daily)

May 7, 2021

I've used this trading technique for many years with great success. I'm sharing it with you today.

Are the Stock Markets Deaf to Covid Agony? (Profit Hunter)

May 6, 2021

Why are markets discounting the economic impact of Covid?

The Worst Sector in the Market (Fast Profits Daily)

May 11, 2021

The worst sector in the stock market according to the charts.

The Key to Profit from India's EV Revolution (Profit Hunter)

May 7, 2021

Stocks you must consider investing in before buying your first electric vehicle.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


May 14, 2021 03:37 PM