For the first time in the country, tax evasion above a sum of Rs50 lakh could be made a punishable offence. As a bold step to curb flow of black money by Indians in banks abroad, the Central Board of Direct Taxes (CBDT) is all set to make this recommendation to the Centre in line with suggestion made by the Special Investigation Team (SIT) on black money.
The CBDT is likely to propose that the offences under the Income Tax Act to be treated as “predicate offences” or offences relating to proceeds of crime inviting punishment under the Prevention of Money laundering Act, 2002. The report will be complete before March 31.
Till now, tax evasion is a compoundable offence. Due to this reason, several Indians who were identified by the Income tax authorities as having illicit money parked in foreign banks, chose to pay the penalty and compound the offence. When tax evasion is made a “predicate offence”, it will have to be specified under the list of Predicate Offences contained in the Schedule attached to the Prevention of Money laundering Act (PMlA).
After the SIT on black money suggested to make tax evasion a punishable offence, the CBDT began to examine which particular provisions of the Income Tax Act should be brought within the ambit of Predicate Offences. To ensure no hardship is caused to salaried or small tax payers, the SIT has prescribed a threshold of more than Rs50 lakh tax evasion to be classified as a predicate offence.
The SIT drew parallels between similar provisions existing in Australia, Canada, the USA and other developed countries where tax evasion is a punishable offence. The apex bench headed by Chief Justice Hl Dattu, monitoring the black money probe, had received the SIT recommendations in December. The other recommendations included amendments to FEMA to provide for attachment and seizure of property in India equivalent to the value of property held abroad, ceiling on holding cash not more than Rs15 lakh at a given point of time, and quoting of PAN on all sales/purchase worth over Rs1 lakh.
According to SIT, cash holding is one of the primary modes of black money transactions. It expected the Government to frame a law providing for a permissible limit of cash holding which could be Rs15 lakh upwards.
While the SIT is expected to table its next report by April this year, the Government informed the apex court on Monday that the process of assessing tax of foreign bank account holders was still on and could be completed by March 31.
Meanwhile, senior lawyer Ram Jethmalani moved a fresh application in his PIl proceeding accusing the Narendra Modi Government of reneging on its poll promise of bringing back black money in six months of coming into power.
In two letters addressed to the Prime Minister, Jethmalani said that he proposed a possible legal framework to tackle black money menace but he has so far not received a word from the PMO. “I must know whether they want to have legislation or if the legislation is in the first stage,” Jethmalani said.
In another development, the court allowed advocate Prashant Bhushan to intervene in the proceedings seeking names of foreign account holders who were allowed to go scot free on payment of penalty. The Bench, while posting the matter after three weeks, said, “We are interested in money coming back to the country and not in knowing their names.”