Black Money and Tax Evasion. in India. Magnitude, Problems and Policy Measures

Transcription

1 Black Money and Tax Evasion in India Magnitude, Problems and Policy Measures By M.M. Sury New Century Publications New Delhi, India

2 Contents About the Book.. Author 's Profile Preface v vi xiv-xv 1. Black Money and Tax Evasion: Conceptual Settings What is Black Money? 1.2 Sectors/Activities More Frone to Generation of Black Money and Tax Evasion Land and Real Estate Transactions Bullion and Jewellery Dealings Complex Financial Market Transactions Charitable (Non-profit) Activities Informal Sector and Cash Economy Self-employed Professionals Externa! Trade and Transfer Pricing 1.3 Tax Evasion: Meaning Tax Evasion and Tax Avoidance 1.4 International Tax Avoidance and Evasion Transfer Pricing Tax Treaty Shopping 1.5 Global Concerns against Black Money/Tax Evasion United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances Multilateral Convention on Mutual Administrative Assistance in Tax Matters United Nations Convention against Corruption United Nations Convention against Transnational Organized Crime

3 viii Black Money and Tax Evasion in India (Palermo Convention) International Convention for the Suppression of the Financing of Terrorism Financial Action Task Force (FATF) Asia/Pacific Group on Money Laundering (APG) 2. Causes and Consequences of Black Money and Tax Evasion Generation of Black Money: Leading Factors Generation of Black Money through Illegal Activities Generation of Black Money through Legal Activities 2.2 Causes of Tax Evasion High Level of Tax Rates Less Respect for Government and its Laws Lenient Penal Action Nature of the Economy 2.3 Consequences of Black Money/Tax Evasion 3. Methods to Generate Black Money and Evade Taxes Cobwebs of Black Money Generation 3.2 Out of Book Transactions No Books of Account Parallel Books of Accounts 3.3 Manipulation of Books of Account Manipulation of Sales/Receipts Manipulation of Expenses Manipulation of Capital Manipulation of Closing Stock Manipulation of Capital Expenses International Transactions through

4 Contents ix Associate Enterprises 3.4 Devices Adopted to Evade Taxes Income Tax Excise Duties Value-Added Tax (VAT) Customs Duties 3.5 Tax Hävens Offshore Financial Centres 3.6 Participatory Notes (PNs) 3.7 Investment through Complex Derivative Instruments 4. Estimates of Black Money/Tax Evasion Black Money: Estimation Techniques Input-output Method Money Circulation Approach Survey Method 4.2 Various Estimates of Black Money/Tax Evasion Early Attempts Taxation Enquiry Commission (TEC) [Chairman: John Matthai], Estimates of Nicholas Kaldor Central Board of Revenue Direct Taxes Enquiry Committee (DTEC) [Chairman: Justice K.N. Wanchoo], National Institute of Public Finance and Policy (NIPFP) Tax Reforms Committee (TRC) [Chairman: Raja Chelliah], Institutional Structure to Deal with Black Money/Tax Evasion Agencies for Enforcement of Tax Laws, Central Board of Direct Taxes (CBDT)

5 X Black Money and Tax Evasion In india Central Board of Excise and Customs (CBEC) 5.2 Regulatory Authorities for Supervision and Policing Central Bureau of Investigation (CBI) Financial Intelligence Unit (FIU) Narcotics Control Bureau (NCB) 5.3 Co-ordinating Agencies Central Economic Intelligence Bureau (CEIB) National Investigation Agency (NIA) 5.4 Other Agencies Central Bureau of Narcotics (CBN) Serious Frauds Investigation Office (SFIO) Registrar of Companies (ROCs) Registrar of Societies (ROSs) Economic Intelligence Council (EIC) National Crime Records Bureau (NCRB) State Police Agencies 6. Measures Adopted to Curb Black Money/Tax Evasion Loweringof Tax Rates 6.2 Tax Amnesties Special Bearer Bonds Voluntary Deposit Scheme, Gold Bond Scheme, Voluntary Disclosure of Income Scheme (VDIS), Advance Tax Payment 6.4 Withholding Tax [or Tax Deduction at Source (TDS)] 6.5 Presumptive Tax for Small Traders Estimated Income Scheme for Small

6 Contents xi Businesses Estimated Income Scheme for Truck Owners 6.6 Permanent Account Number (PAN) or General Index Register Number (GIR) 6.7 Survey of Income Tax 6.8 Summons, and Search and Seizure Summons Search and Seizure 6.9 Penalties and Prosecutions Penalties Prosecutions Penal Provisions: A Comment 6.10 Use of Information Technology in Tax Administration E-payment of Tax and E-filing of Returns Digital Signature 6.11 Recent Legislative Measures to Prevent Generation of Black Money Prevention of Money Laundering Act (PMLA), Benami Transaction (Prohibition) Bill, Public Procurement Bill, Prevention of Bribery of Foreign Public Officials and Officials of the Public International Organisation Bill, Lokpal and Lokayukta Bill, Citizens' Grievance Redressal Bill Judicial Standards and Accountability Bill, Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010

7 xii Black Money and Tax Evasion in India Electronic Delivery of Services Bill, International Aspects of Indian Taxation (Double Taxation) What is Double Taxation? Double Taxation by the Same Tax Jurisdiction Double Taxation by Competing Tax Jurisdictions at Different Levels of Government in a Countiy Double Taxation by Competing Tax Jurisdictions at Same Level of Government in Different Countries 7.2 International Double Taxation 7.3 Assignment Rules of Foreign Income SourceRule Residence Rule 7.4 Methods to Alleviate International Double Taxation Exemption Method Foreign Tax Credit Bilateral Tax Treaties Multilateral Tax Treaties 7.5 Indian Law on Double Tax Relief 7.6 Salient Features of a Typical Tax Treaty between India and Another Country Scope of the Treaty Permanent Establishment Provisions for Taxation under the Tax Treaty Provisions Regarding Elimination of Double Taxation Non-discrimination Clause Mutual Agreement Procedure Exchange of Information

8 Contents xiii 7.7 Double Taxation Relief Where no Tax Treaty Exists 7.8 Issues Relating to Indo-Mauritius Tax Treaty Supreme Court on Indo-Mauritius DTAA 7.9 Transfer Pricing Regulations in India 7.10 Assessment and Collection of Tax from Non-residents in India 8. Summing Up Special Investigation Team (SIT) to Unearth Black Money, 2014 Appendix 1: White Paper on Black Money, Government of India, Ministry of Finance, May Appendix 2: Direct Taxes Enquiry Committee (Chairman: Justice K.N. Wanchoo), 1971, Extracts on Black Money and Tax Evasion Bibliography Index