What is the source of black money - SC asks the Government

The Supreme Court on Thursday asked the Central government to file its plan of action on dealing with the black money issue by February 3.

"We want to know what steps you have taken against the people who have accumulated so much money in foreign banks. What are the sources of the money," said the apex court. "You are aware of some names; have you set law in motion against them? And why are you repeatedly talking about tax issues only?" the SC asked the government.
"Looking at the issue from the taxation point of view is just one aspect but there are other serious matters associated with the black money which we are concerned about.” 
"Is there no basis to figure out black money? What is the source of black money, which has been stashed away in foreign banks? Is it arms deal, drug peddling or smuggling?" the SC asked.

The government faced the SC wrath two days after it held a press conference to disclose its strategy in dealing with Indian money in foreign banks. On Tuesday, Union Finance Minister Pranab Mukherjee said though no reliable estimate of black money is available, the government is formulating a five pronged strategy to bring back the money stashed in foreign banks as well as stop further outflow of money. He also defended the government’s decision not to disclose names of Indians with foreign bank accounts. 

As the government faced criticism from the Supreme Court and Opposition parties over its reluctance to disclose names of Indians with foreign bank accounts, Mukherjee addressed a press conference here to ‘share with you the proactive steps taken by the government to combat the menace of illicit funds generated both as a result of tax evasion and corruption’. Mukherjee, pointing that there is no reliable estimate of black money both inside and outside the country, said an interim recommendations of BJP Task Force 2009 have estimated the amount of black money to be between USD 500 billion to USD 1,400 billion, while a current study by Global Financial Integrity has estimated the present value of illicit money outflow to be USD 462 billion.
“Government has been seized of the matter and has constituted a multidisciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens,” he said. Mukherjee informed undisclosed income of about Rs 15,000 crore has been detected in the last 18 months.

“During the same period, Directorate of International Taxation has collected taxes of Rs 34,601 crore. The Directorate of Transfer Pricing has detected mispricing of Rs 33,784 crore, which has prevented shifting of an equivalent amount of money outside India,” he added. The Union minister, once again stating the government’s inability to make public the names, said India was bound by international treaties.
“The government has nothing to hide. We can't get any information on black money unless there is legal framework. Whatever information we have got is on condition of secrecy. We have given names to Supreme Court,” Mukherjee said. He maintained that if India were to dishonour the international agreements, foreign nations may not share information with it in the future.

In order to address the issue more effectively, the government has formulated a five pronged strategy which consists of joining the global crusade against ‘black money’; creating an appropriate legislative framework; setting up institutions for dealing with Illicit Funds; developing systems for implementation; and imparting skills to the manpower for effective action, the minister informed.

Mukherjee said India has completed negotiations of ten new Tax Information Exchange Agreements with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands out of 22 identified countries/jurisdictions.
“India has initiated process of negotiation with 65 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information regarding taxpayers not covered by DTAA,” he added.
The administrative machinery is being strengthened by setting up eight more income tax overseas units, besides the two units operational in Singapore and Mauritius. Strength of foreign tax division has been doubled and government is setting up an Exchange of Information (EoI) Cell, which will help in effective exchange of information to curb tax evasion, the minister further said.
Source - http://www.indianweekender.co.nz/Pages/ArticleDetails/10/2024/India/Black-money-Top-court-gives-India-govt-time-till-Feb-3

OUR INDIANS' MONEY - 70, 00,000 CRORES RUPEES IN SWISS BANK

This is a Mail that is being forwarded these days.....

1) Yes, 70 lakhs crores rupees of India are lying in Switzerland banks. This is the highest amount lying outside any country, from amongst 180 countries of the world, as if India is the champion of Black Money.

2) German Government has officially written to Indian Government that they (German Government) are willing to inform the details of holders of 70 lakh crore rupees in their Banks, if Indian Government officially asks them.

3) On 22-5-08, this news has already been published in The Times of India and other Newspapers based on German Government's official letter to Indian Government.

4) But the Indian Government has not sent any official enquiry to Germany for details of money which has been sent outside India between 1947 to 2008. The opposition party is also equally not interested in doing so because most of the amount is owned by politicians and it is every Indian's money.

5) This money belongs to our country. From these funds we can repay 13 times of our country's foreign debt. The interest alone can take care of the Center's yearly budget. People need not pay any taxes and we can pay Rs. 1 lakh to each of 45 crore poor families.

6) Let us imagine, if Swiss Bank is holding Rs. 70 lakh crores, then how much money is lying in other 69 Banks? How much they have deprived the Indian people? Just think, if the Account holder dies, the bank becomes the owner of the funds in his account.

7) Are these people totally ignorant about the philosophy of Karma?

What will this ill-gotten wealth do to them and their families when
they own/use such money, generated out of corruption and exploitation?

8) Indian people have read and have known about these facts. But the helpless people have neither time nor inclination to do anything in the matter. This is like "a new freedom struggle" and we will have to fight this.

9) This money is the result of our sweat and blood.. The wealth generated and earned after putting in lots of mental and physical efforts by Indian people must be brought back to our country.

10) As a service to our motherland and you contribution to this struggle, please circulate at least 10 copies of this note amongst your friends and relatives and convert it into a mass movement.

Earlier Post on this same Topic - here

Colors of Money in India

BLACK MONEY in Swiss bank from India has become a major issue in the current Lok Sabha elections in the country. The BJP, the Congress and the Left have decided to capitalise on the issue making claims and counter claims. According to an estimate put forward by BJP’s prime ministerial candidate L K Advani , anything between 25 lakh crore and 70 lakh crore of rupees have been siphoned out of the country in the past sixty years. While the BJP blamed the Congress for siphoning off funds from the country, the Congress rebuffed by saying that even the NDA government during its tenure did not take any steps to prevent such siphoning off of funds from the country. According to the 2006 estimate of the Swiss Bank Association, the Indians have deposited over 1450 billion dollars. A recent estimate said the amount had now gone up to 1891 billion dollars. Source

Why call it "Black" ?
So how come we call it black money? All countries, to a greater or smaller percentage, have what is known as a parallel, or cash, economy that operates outside the legitimate loop. But India's parallel economy is unparalleled, in that by many guesstimates it is not only as big as the legit economy but in fact a couple of times bigger. And we have a unique name for it. Black money. Also known as No.2. The origins and current disposition of black money are as mysterious as its name. Source

A 2006 report of the Swiss Banking Association dug out by an Indian private channel, CNN-IBN, claims Indians are the biggest depositors of black money in banks located in Switzerland. Top five countries in terms of such deposits were:
India: $1456 billion
Russia: $470 billion
UK: $390 billion
Ukraine: $100 billion
China: $96 billion
India with $1456 billion or $1.4 trillion has more money in Swiss banks than rest of the world combined. This must be unaccounted money earned in India by wrong means as otherwise any Indian wanting to open a bank account abroad has to take permission of the Reserve Bank of India and records do not show any such permissions granted for deposits in Switzerland. In March 2005, the Tax Justice Network (TJN) published a research finding demonstrating that $11.5 trillion of personal wealth was held offshore by rich individuals across the globe. The findings estimated that a large proportion of this wealth was managed from some 70 tax havens. Source

The share prices of real estate companies have crashed. Yet, India has no mortgage crisis or financial sector crisis. Why not? Mainly because of the huge amount of black money in Indian real estate. This has saved the Indian financial sector in unexpected ways. This is because a large proportion, often half, of almost all home purchases is paid in black money. If a house is sold for Rs 100 lakh, the official registered value will typically be only Rs 50 lakh, with the balance paid under the table in cash. A bank may loan Rs 50 lakh, covering the entire formal price. However, the owner's contribution is not zero: he has paid Rs 50 lakh in black. To preserve that black investment, he will keep paying his installments even if house prices dip.Now, the Indian legal system is so slow that borrowers have little fear of even their mortgaged homes being seized, let alone other assets. Yet, they do not default, and India's financial system remains strong. The reason is that banks enjoy, without asking for it, a huge safety margin provided by the black money invested by every home owner. To preserve this black investment, borrowers will do their level best not to default and lose their property. Ironically, black money enforces loan discipline in India, far more effectively than formal contracts or legal processes. Source

Since the Middle Ages, Switzerland has stood for bank secrecy -- or bank privacy, as the Swiss would insist. In the past month, this foundation of Swiss banking has collapsed under calls for transparency, making Swiss banks seem as outdated as cuckoo clocks. The nearly universal condemnation of Swiss banking is a sign of how quickly our expectations about privacy have changed. Under pressure from the U.S., Germany, Britain and other high-tax countries, the Swiss agreed to abandon their longstanding protections for depositors accused by their home countries of tax evasion. Until now, countries had to present evidence of fraud, a more serious accusation, before Swiss banks would turn over information about their clients. Switzerland has long been the preferred location for private banking, with more than $2 trillion of the $7 trillion in all offshore deposits located in the country. For many years, the global consensus was that the benefits of banking secrecy outweighed the clear vices. It took almost 50 years before Swiss bankers agreed to look into deposits left by Jews killed by the Nazis, eventually creating a $1.25 billion fund for their heirs. The Swiss have taken other steps, including against terrorists and money launderers, but the hard line against tax complaints from other countries was considered unmovable. Source