A key focus of the Union Budget-2015 was the steps that the government proposes to take on the issue of black money. The BJP's mantra during the election campaign was bringing back black money and the budget dealt to a large extent with just that.
Laws to prosecute those who have illegal money or carrying out benami transactions would face stringent punishment. Laws would also deal strongly with financial institutions abetting people to hide black money.
Moreover the circulation of black money in real estate too would be dealt with strongly and there is no immunity scheme that the government proposes to provide.
Amending the Prevention of Money Laundering Act
When money is laundered and parked in banks abroad the provisions of the Prevention of Money Laundering Act would come into play. This would mean that the government would have the right to attach and confiscate properties of those who park un-accounted money abroad.
However the more interesting aspect would be when the amendment to the PMLA comes into force. Once the Act is amended then it would give the enforcement agencies to confiscate or attach properties of black money holders in India.
This would act as a boon since the enforcement agencies would not have to attach properties of the accused abroad. This has also been a difficult task as there is a lot of red tape that would come into the picture.
Once the act is amended and it is found that a person holds black money abroad then the properties of the equivalent in India can be attached and confiscated.
No immunity in real estate deals
There is a lot of black money that is circulating in the real estate sector. Most of the time the buyer pays money in black to the realtor and the property is always undervalued at the sub-registrar's office. In most of the cases in the past, it was found that such cases were let off and an immunity was provided.
However this approach had not helped the government and the circulation of black money in real estate only increased ten fold. As per the new amendment to be made in the Income Tax Act, there would be no immunity provided in cases of black money transactions. Those indulging in it could end up paying hefty fines.
The punishment proposed by the finance minister are stringent in nature. Ten years or imprisonment for concealing names and assets and also evading tax on foreign assets have been mentioned in the budget.
The offences would be non-compoundable and this would mean that the accused person will not have the option of approaching a settlement commission as has been the practice all these days.
Further a 300 per cent tax for concealment of income and assets and prosecution for not filing returns on disclosure of foreign assets will also help in curbing black money.