Penalties and Prevention - The Hindu
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3/11/2015 Penal ti es and preventi on - The Hi ndu http://w ww. thehi n du.com /todays- paper / tp-o pi ni on/penal ti es- and- pr eventi on/ar ti cl e 6979884.ece 1/1 oday's Paper » OPINION Penalties and prevention he issue of black money elicited hyper-reactions from the BJP in the run-up to the general election last year, and not ithout reason. For a layperson, black money is usually associated with the rich. Oftentimes, political parties raise this ssue to demonstrate their pro-poor slant. Given these facts, it is no surprise that the BJP government has proposed a lew of legislative actions to tackle the twin issues of assets held illegally abroad and unaccounted wealth within the ountry. The broad contours of the government’s initiatives on the black money front as sketched out by Finance Minister Arun Jaitley in his budget speech, provide for stringent punishments. Non-disclosure of and non-payment of ax on foreign assets could land anyone in jail, with a rigorous prison term of up to 10 years. While proposing to make uch an offence non-compoundable, Mr. Jaitley has sought to shut the option for such an offender to appeal to the Settlement Commission. Also, the enforcement authorities will be armed with powers to search, seize and prosecute, to ring the recalcitrant ones to book. To tackle the black money issue, the government has decided to bring in a new and omprehensive Benami Transactions (Prohibition) Bill during the current session of Parliament. Since benami deals, specially in real estate, are a major source of black money generation, Mr. Jaitley has trained his focus on them. There s a conscious drive to capture transactions of a certain size in the system by insisting on the use of PAN details. he proposals no doubt reflect the political underpinnings of the BJP’s thought process on an issue like black money. hese will serve to please its core constituency, which voted for it overwhelmingly. Nevertheless, these represent erely an attempt to discover a cure for the disease. The system and the practice as they exist today create a perfect reeding ground for tax evasion. And the tax structure adds to the complication. If the benefit accruing from avoidance s great and the risks of detection are minimal, the tendency to evade tax will persist. Mr. Jaitley’s budget-related roposal will instil fear in the minds of tax-evaders. Also, these could arm taxmen with more powers. Vodafone and like ases are examples of how the taxman has often adopted a blinkered approach. Should the focus not be on erasing the enefits arising out of tax avoidance? Surely, prevention is the right solution. This calls for an environment that fosters ax compliance, and a regime that ushers in a friendly playing field. If any proof is required, it is available in the ngoing coal and spectrum auctions. One needs a wiser head, more than a heavy hand, to tackle the black money enace.
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Transcript of Penalties and Prevention - The Hindu
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3/11/2015 PenaltiesandpreventionTheHindu
http://www.thehindu.com/todayspaper/tpopinion/penaltiesandprevention/article6979884.ece 1/1
Today'sPaperOPINION
Penaltiesandprevention
TheissueofblackmoneyelicitedhyperreactionsfromtheBJPintherunuptothegeneralelectionlastyear,andnotwithoutreason.Foralayperson,blackmoneyisusuallyassociatedwiththerich.Oftentimes,politicalpartiesraisethisissuetodemonstratetheirpropoorslant.Giventhesefacts,itisnosurprisethattheBJPgovernmenthasproposedaslewoflegislativeactionstotacklethetwinissuesofassetsheldillegallyabroadandunaccountedwealthwithinthecountry.ThebroadcontoursofthegovernmentsinitiativesontheblackmoneyfrontassketchedoutbyFinanceMinisterArunJaitleyinhisbudgetspeech,provideforstringentpunishments.Nondisclosureofandnonpaymentoftaxonforeignassetscouldlandanyoneinjail,witharigorousprisontermofupto10years.Whileproposingtomakesuchanoffencenoncompoundable,Mr.JaitleyhassoughttoshuttheoptionforsuchanoffendertoappealtotheSettlementCommission.Also,theenforcementauthoritieswillbearmedwithpowerstosearch,seizeandprosecute,tobringtherecalcitrantonestobook.Totackletheblackmoneyissue,thegovernmenthasdecidedtobringinanewandcomprehensiveBenamiTransactions(Prohibition)BillduringthecurrentsessionofParliament.Sincebenamideals,especiallyinrealestate,areamajorsourceofblackmoneygeneration,Mr.Jaitleyhastrainedhisfocusonthem.ThereisaconsciousdrivetocapturetransactionsofacertainsizeinthesystembyinsistingontheuseofPANdetails.TheproposalsnodoubtreflectthepoliticalunderpinningsoftheBJPsthoughtprocessonanissuelikeblackmoney.Thesewillservetopleaseitscoreconstituency,whichvotedforitoverwhelmingly.Nevertheless,theserepresentmerelyanattempttodiscoveracureforthedisease.Thesystemandthepracticeastheyexisttodaycreateaperfectbreedinggroundfortaxevasion.Andthetaxstructureaddstothecomplication.Ifthebenefitaccruingfromavoidanceisgreatandtherisksofdetectionareminimal,thetendencytoevadetaxwillpersist.Mr.Jaitleysbudgetrelatedproposalwillinstilfearinthemindsoftaxevaders.Also,thesecouldarmtaxmenwithmorepowers.Vodafoneandlikecasesareexamplesofhowthetaxmanhasoftenadoptedablinkeredapproach.Shouldthefocusnotbeonerasingthebenefitsarisingoutoftaxavoidance?Surely,preventionistherightsolution.Thiscallsforanenvironmentthatfosterstaxcompliance,andaregimethatushersinafriendlyplayingfield.Ifanyproofisrequired,itisavailableintheongoingcoalandspectrumauctions.Oneneedsawiserhead,morethanaheavyhand,totackletheblackmoneymenace.
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