White Paper points to 4-pronged strategy to curb black money
Finance Minister Pranab Mukherjee tabled a White Paper on black money in Lok Sabha, which makes a strong case for setting up Lokpal and Lokayuktas to deal with the menace of Black Money. The minister informed that there was no exact estimation of the black money generated in the country but refuted the reports that Indians held the largest deposits in Swiss banks by providing data.
The White Paper suggests 4-pronged strategy to curb generation of black money which includes-
- More incentives for voluntary compliance of tax laws
- Reforms in vulnerable sectors of economy
- Creation of credible deterrence.
- Reforms in financial and real estate sectors would help in reducing generation of black money in long term as freeing of gold imports had helped in checking smuggling.
- Fast-track courts to seriously deal with financial offences and deterrent punishment for offenders
- More research to get to the reliable estimates of amount of black money and also sought the cooperation of the state governments in tackle the problem
- Provide tax incentives for encouraging use of debit and credit cards as these leave audit trails.
On the possibility of any tax immunity scheme, especially gold deposit scheme, to deal with black money, it held: The issue of complete tax immunity needs to be examined in the light of other policy objectives.
Black money in the real estate sector accounts for 11% of GDP. In order to curb this it suggests to:
- Develop a nationwide data base
- Introduce TDS on sale of property
- Set up electronic payment system
The government has brought 5 bills which are at various stages of consideration by Parliament:
- The Lokpal Bill
- The Judicial Accountability Bill
- The Whistle Blowers Bill
- The Grievance Redressal Bill
- The Public Procurement Bill
The expansion of information exchange network at the international level will assist in checking cross-border flow of illegitimate wealth. These measures will prepare the ground for just, transparent and a more effective economy.