THE Finance
Minister, Mr Pranab Mukherjee, tabled the much-awaited White Paper on Black
Money in Parliament yesterday. According to the White Paper, at the end
of 2010, liabilities of Swiss Banks towards Indians and Indian Companies,
i.e., the amount of money stashed by the Indians in Swiss Banks is a mere
Rs 9,295/- crores. (and more than that he is any way going to get back
from Vodafone)
According to the White Paper, this is 0.1302% of the total liabilities of
Swiss Banks towards all countries. (India is not, after all that black a
country!) Some highlights of the White Paper:
Black
Money synonyms:
‘unaccounted
income', ‘black income', ‘dirty money', ‘black wealth', ‘underground wealth',
‘black economy', ‘parallel economy', ‘shadow economy', and ‘underground'
or ‘unofficial' economy.
How
Black Money is generated:
Black
Money is generated through - Out of Book Transactions, Parallel Books of
Accounts, Manipulation of Books of Account, Manipulation of Sales/Receipts,
Under-reporting of Production, Manipulation of Expenses, Manipulation by
way of International Transactions through Associate Enterprises, Manipulation
of Capital, Manipulation of Closing Stock, Manipulation of Capital Expenses,
Land and Real Estate Transactions, Bullion and Jewellery Transactions, Financial
Market Transactions, Public Procurement, Non-profit Sector, Informal Sector
and Cash Economy, External trade and Transfer Pricing, Trade-based Money
Laundering (TBML), Tax Havens, Offshore Financial Centres, Investment through
Innovative Derivative Instruments.
Bank
Deposits decreased from 2006:
It
is however useful to mention here one estimate of the amount of Indian deposits
in Swiss banks (located in Switzerland) which has been made by the Swiss
National Bank. Its spokesperson stated that at the end of 2010, the total
liabilities of Swiss Banks towards Indians were 1.945 billion Swiss Francs
(about Rs 9,295 crore). The Swiss Ministry of External Affairs confirmed
these figures when a reference was made by the Indian Ministry of External
Affairs to them. Since the information was publicly available on the website
of the Swiss National Bank, the figures of earlier years were also taken
and are tabulated in Annexure Table 1. From this Table, it can be seen that
bank deposits of Indians in Swiss banks have decreased from Rs 23,373 crore
in year 2006 to Rs 9,295 crore in year 2010.
Vodafone
in White Paper:
The
Vodafone tax case provides an instance of the misuse of corporate structure
for avoiding the payment of taxes. In this case, the Hutchison Group had
made investments in India from 1992 to 2006 through a number of subsidiaries
having ‘separate corporate personality' but which were essentially post box
companies based in the Cayman Islands, British Virgin Islands, and Mauritius.
The Hutchison Group sold its entire business operation in India in February
2007 to the Vodafone Group for a total consideration of USD 11.2 billion
and the same was effected through transfer of a solitary share of a Cayman
Islands company. When the tax authorities requested the accounts of the said
company, the answer given was that as per Cayman Islands law, the company
was not required to prepare its accounts.
(And
the answer given by the Indian Tax authorities is mind blowing!)
The
White Paper lists out various agencies that can unearth black money and the
Frame work for tackling the menace of black money and refers to various reports
and Committees. The other day a layman was mentioning that the best way to
reduce black money is to do away with currencies of higher denominations.
A few weeks back, Rs 35 crores were recovered from a house in Chennai and
the currency was found to be neatly packed in 35 bundles.
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