General Awareness

April 04, 2017 @ 01:15 PM

Treaties or willpower which can get Black Money?

Published : Friday, 07 November, 2014 04:22 PM 
 
MBA aspirants must be updated with General Awareness on current topics. General awareness topics with analytically drawn conclusions will benefit you in XAT, IIFT, CMAT,  MAT,  Essay writing, General Awareness sections besides in GD & PI.  
 
Today, you will read Current Affair Topic:
 
Treaties or willpower which can get Black Money?
 
Black money has always been a part of prime news in India because of the prevalent corruption. No government in the past whether UPA, NDA or Third Front was able to unearth the huge amount of black money allegedly stashed abroad.
 
Even the conservative estimates expect the amount of black money stashed abroad to be around 50 percent of the GDP while the some believed it to be as much as two times the GDP.
Even if it is at its lowest level, the amount of black money is sufficient enough to change the fortunes of the country if brought back into the nation. The new government, which promised to bring back the money back into India within 100 days of coming into the power, has started citing the very same reasons used by the former government for not revealing the name of foreign banks account holders.
 
Willpower is a very fluctuating thing which changes with the change in position. The political party which boasted of extreme level of idealism while sitting in the opposition started putting forward the technical and practical issues once it comes to other side of the table and forms the government. Is it because of a sudden encounter with the reality after coming into the power or just a sheer lack of willpower?
 
There has been a debate on whether disclosure of names, without prosecution, could violate tax treaties under which these names and other details are shared by foreign countries. Government too in Supreme Court expressed its inability to disclose the names of the account holders in foreign banks because of the confidentially clause in treaties with other countries.
 
According to the Swiss Federal Department of Finance spokesperson, Swiss-Indian Double Taxation Agreement states that any information received by a contracting state shall be treated as ‘secret’ in the same manner as information obtained under the domestic laws of that state. The treaty further provides that any such information shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of (information), the enforcement or prosecution or in the determination of appeals in relation to the taxes.
  
On October 15, 2014, a team of officials led by Revenue Secretary and comprising of Chairman, Central Board Of Direct Taxes (CBDT) signed a Joint Statement with the appropriate authorities of Switzerland with regard to investigation into black money stacked in Swiss banks.
 
The four important aspects of that agreement are:
 
• With regard to the list available with India of account holders in the HSBC, where Indian tax authorities have conducted independent investigations, the Swiss would provide India with details upon our furnishing of adequate evidence in this regard.
 
• Whenever India has some information/ documentary evidence, the Swiss would confirm the authenticity or otherwise of that evidence.
 
• This would be done in a time bound manner.
 
• Discussion would now start on a bilateral agreement on automatic exchange of information in the banking system. If this bilateral arrangement is arrived at, it will be an important milestone in detection of black money held by Indians in Swiss banks.
 
Thus, the overseas tax treaties do have a point behind the denial of government to reveal the names of foreign account holders to the apex court. As far as willpower is concerned, appointment of Special Investigation Team (SIT) by the new government in its very first cabinet meeting showed its resolve over the black money issue.
 
For three years, the UPA Government was refusing to appoint the SIT as directed by the Supreme Court. Despite this fact, it is also true that government is doing less than what was expected from it to do to unearth the black money. Though it revealed the names to the Supreme Court in a closed envelop at the behest of the latter, government’s lack of interest in going forward over the issue is also not hidden and it manifested its lack of willpower.
 
People accumulating the black money abroad would not be a small fish by any means and therefore, in the national interest, strong willpower is expected from the government to do every bit to change the fortunes of the country. Also, blanket protection to these corruption stalwarts under the garb of external treaties is the denial of economic justice to the millions of honest Indian who render a portion of their hard earned money to the government in the form of taxes.
 
 
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