regulation on black money- step in the right direction ppt
TRANSCRIPT
“ In Ancient times our country,
INDIA, was popularly known as
“Golden Bird” because people of
our country were more civilised in
terms of coordination and co-
operation, worked in a very
enthusiastic & honest manner.
BLACK MONEYLet’s start with discussing what does Black Money mean?
Black
Money
▪ No specific Definition
▪ What is official is White Money and that unofficial, Black
Money
Black Money
Illegitimate SourcesSmuggling, Bribery,
Drugs,etc.
Legitimate Sources Tax Evasion
HISTORICAL
REASONSNow, let’s discuss the historical reasons for the accumulation of Black Money
Historical
Reasons
▪ Shortages during World War
▪ Faulty Taxation
▪ Redundant Control Measures
▪ Large Public Expenditure
CONDUITSThe main channels for the generation of Black Money
Conduits
For Black Money
▪ Hawala
▪ Economics of Gold
▪ Rising share of services
Sender Beneficiary
Hawala Broker A Hawala Broker B
Gives Passcode
Informs passcode by phone,etc.
Some other sources
Of Black Money
▪ Under-invoiced inventories
▪ Over-invoiced plant and equipment
▪ Informal sector activities including trade, films, production etc
▪ Illegal holding of precious metals, gem and jewellery
▪ Flight of capital for investments abroad
▪ Transfer activities (like secondary share market and real estate) and
buying of influence (bribe for work)
▪ Illegal activities like smuggling, drugs, prostitution, and crime
STATISTICSLet’s see some interesting statistics about Black Money..!!!
$510.29 BillionThe amount of Illicit outflows from India during the period 2004-2013.
178.04
180.71
191.77
209.22
226.67
418.54
510.29
528.44
1049.77
1392.28
0 200 400 600 800 1000 1200 1400 1600
Nigeria
Indonesia
Thailand
South Africa
Brazil
Malaysia
India
Mexico
Russian Federation
China
(In USD Billions)Source: Global Financial Integrity
Cumulative Illicit Flows
From Developing Countries, 2004-2013
Components of Illegal Income
A study by National Institute of Public Finance and Policy
Evasion of Personal Income
Tax48%
Under-reporting of Production
28%
Under-registration of
Immovable Property
18%
Other Factors6%
+VE SIDE EFFECTCan Black Money have a +ve Effect on an Economy??
The answer is a huge NO. But, luckily for our Indian Economy it had had some
positive side-effect.
Effect of
Subprime Crisis
0
20
40
60
80
100
120
0 1 2 3 4 5 6 7
House Value Vs Mortgage Value after Housing Bubble Burst
House Value Mortgage in India Mortgage in Other Countries
Steps in the
Right Direction
The importance of dealing with the
problem of Black Money has been
visible in the Government's agenda,
with the issue being mentioned during
the presentation of the Union Budget
too….
STEPS TO CURB
Curbing Black Money stashed
Overseas
Curbing Domestic Black
Money
Curbing
Black
Money
Stashed
Overseas
Important
Regulations
▪ The Foreign Exchange Management Act, 1999 (FEMA)
▪ The Prevention of Money Laundering Act, 2002 (PMLA)
Are the two important legislations enforced by Directorate General of
Economic Enforcement (ED).
Value of Assets confirmed by Adj. Authority
Under PMLA (Rs. In Crore)
960.77
325.98
1395.4
2150.8
0
500
1000
1500
2000
2500
<2012 2012-13 2013-14 2014-15
Amount
Recent
Developments
▪ The Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015 was passed.
▪ Applicable to RORs
▪ Stringent Provisions introduced
▪ Safeguards are provided so that innocent are not harassed
Contd….
3 Month Compliance Window for Voluntary Disclosure
INR 41.64 BillionIncome/ Asset Disclosure
644Declarations
That’s a lot of Money!!!!Contd….
Recent
Developments
▪ Signing of FATCA with US
▪ Amendment of Mauritius Treaty
▪ Initiative for signing of Automatic Exchange of Information Treaty with
all major countries including Switzerland
▪ Initiatives under BEPS (Based Erosion and Profit Sharing) such as
country by country reporting
▪ PoEM ( Place of Effective Management), etc.
Curbing
Black
Money
Domestic
Curbing Black Money
Domestic
▪ Mandatory quoting of PAN
▪ Annual reporting for certain specified transactions through SFTRA
▪ Encouraging Cashless transactions
Disparity in growth of Cashless
Transactions and Infrastructure
64%
43%
28%
0%
10%
20%
30%
40%
50%
60%
70%
Debit Cards ATMs POS Machines
Growth
Growth
Income Declaration Scheme
2016
Rs.65,250 Cr
64,275 Declarants
Avg Rs.1 Cr
Per Declarant
Recent
Developments
▪ Financial Inclusion
▪ Benami Transaction(Prohibition) (Amendment) Bill
▪ Cost of tax compliance lesser than cost of taxation
Demonetisation of
Old Currency
“ A “BAD ATTITUDE” is like a flat
tire, You can’t get very far until you
“CHANGE” it…
Thanks!!