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Rediff.com  » Business » Rs 1 lakh crore illicit wealth under tax net, says FM

Rs 1 lakh crore illicit wealth under tax net, says FM

Last updated on: March 14, 2011 18:22 IST

Finance Minister Pranab Mukherjee on Monday said that revenue authorities have detected tax evasion of about Rs 1 lakh crore (Rs 1 trillion) during the past 18 months as a result of international cooperation as well as domestic surveillance.

"Almost Rs 1 lakh crore, may be a little less than that, we have been able to bring under the tax net in last 18 months," Mukherjee said while replying to the general discussion on Budget in Rajya Sabha.

Mis-pricing in international transactions to the extent of Rs 33,784 crore (Rs 337.84 billion) has been detected and brought under taxation, he said, adding another Rs 25,000 crore (Rs 250 billion) has been found during search and seizure operations in the past year-and-a-half.

Besides, he said, during assessment the Directorate of Foreign Taxation detected tax evasion of Rs 34,601 crore (Rs 346.01 billion).

"We may say it is quite inadequate and I will agree it should have been much more. But you can't say it is nothing," he said.

The detection of unaccounted wealth, Mukherjee said, has become possible because of the initiatives taken by the global leaders at the Pittsburgh Summit for exchange of banking and tax-related information.

'Black money' is being generated through transfer pricing mechanism, Mukherjee said, adding, "cooperation has been extended by other countries to relay the information regarding banking transactions."

As part of the efforts to trace funds stashed abroad, Mukherjee said, the government has entered into Tax Information Exchange Agreement (TIEA) with 10 countries, including the Isle of Man, St Kitts and Nevis and Channel Islands, which are not sovereign jurisdictions.

In addition, he said, India has amended Double Taxation Avoidance Agreement (DTAA) with 23 countries, including Switzerland, to enable the government to seek banking information.

India has signed DTAA with 79 other countries and is in the process of revising the agreement with other nations as well.

Referring to the issue of quantum of funds stashed abroad in tax havens, the minister said, the figures, which are based on unverified assumptions, range from $500 billion to $1,500 billion.

"Astronomical figures could be quoted but we have to proceed within the legal system. Millions upon millions, billions upon billions can be quoted but it has to be accepted by the court of law," Mukherjee said.

The government, he said, has set up a committee of experts to estimate the quantum of black money and suggest measures to prevent generation of unaccounted wealth.

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