India needs to do more on Black Money

Citi’s global financial company, said today that India must do more to stop the flow of illegal funds “tax havens, despite recent government measures have yielded some results.

“Although the government’s efforts to present some results … more to be done to solve the annual loss of property abroad through illegal flows,” Citi said in a report.

During the last 18 months the government has detected undisclosed income over Rs 15,000 crore, the Directorate of International Taxation has collected taxes of Rs 34,600 crore and the Directorate of transfer pricing has detected mis-pricing of Rs 33,800 crore.

Besides, the Indian government earlier this month adopted a 5-fold strategy that seeks a more proactive role for itself in the global crusade against illicit funds and creating an appropriate legislative framework including setting up overseas tax units.

A recent study by Global Financial Integrity (GFI) estimates the present value of total illicit flows at USD 462 billion, while a BJP Taskforce report in 2009 had put it anywhere between USD 0.5 and 1.4 trillion. Besides, GFI indicates that India losses funds at the rate of USD 19 billion each year.

“Curbing tax evasion and efforts to bring back illicit flows overseas would positively impact both the public finances as well as the Balance of Payments-via the remittance route,” it added.

India at present has Double Taxation Avoidance Agreement with 79 countries and is working towards modifying the articles concerning exchange of banking information.

In recent years, India has put in place measures to prevent money laundering, terrorist financing and financial activities in compliance with FATF standards, it added.