Black money parking in foreign banks

THE UNLAWFULLY ACQUIRED MONEY KEPT ABROAD IS ROUTED BACK TO INDIA BY THE ROUND TRIPPING PROCESSES

- Gopabandhu Mohapatra

In today’s globalised world, investors are increasingly looking beyond their home country for attractive investment opportunities. There’s no definitive figure for the total amount of Indian deposits held in foreign countries.

Some reports suggest that substantial sums of money, including both legal and illegal funds, potentially are held in foreign accounts. For nonresident Indians (NRIs), foreign currency fixed deposits have emerged as popular options for diversifying their earning for higher returns.

The unaccounted money that is concealed from the tax administrator is called black money. Black money includes all funds earned through illegal activity and otherwise legal income that is not recorded for tax purposes. Black money is a result of systemic issues like corruption, bribery, and inadequate measures to curb the generation of illicit wealth. There is income on which the taxes imposed by government or public authorities have not been paid.

Recognizing the need to curb black money, a comprehensive law ‘The Black Money Act’ was introduced in 2015 and announced a voluntary disclosure scheme till September 30, 2016, for declaring assets and until December 31, 2016, to pay tax at 30 per cent and penalty at 30 per cent. With the new law, it was mandatory to disclose foreign assets and income in your income tax return to avoid tax evasion and enhance transparency in cross-border transactions.