There has been considerable concern and discussion regarding bringing back India's unaccounted money stashed in foreign banks in Switzerland, Germany and tax havens.

The Union Government discussed this issue at a Cabinet meeting recently after the Supreme Court expressed serious displeasure over the Government's reluctance to furnish complete information about the Indians who have parked huge amount of black money in foreign banks.

The court said that such unaccounted money is not a tax issue but a plunder of the nation with serious security ramifications. The problem, the court said, is a mind-boggling crime.

One of the ideas mooted in the media to bring such money into the country is to float an amnesty/voluntary disclosure scheme.

However, the past experience with such scheme has been most unsatisfactory and the largest amount that could be collected by such a scheme, VDS 1997, was merely a sum of Rs. 10000 crore — peanuts in the background of the money that is held unaccounted in India and abroad and for which no reliable estimate is possible.

Amnesty schemes are great disincentive for persons who believe in honest discharge of their tax obligations.

Encouraging evaders

These give encouragement to tax evaders to evade and wait for amnesty scheme from the side of the Government which have been announced frequently in the past.

Their could have been another amnesty scheme after 1997 but the Central Government gave an undertaking to the Supreme Court in the case of All India Income-tax Practitioner's appeal before the Court that Government would float no such scheme in future. Hence the question of floating an amnesty scheme for soliciting money kept abroad need not be thought of.

The appropriate course would be to get the information through negotiations. Some countries have provided/agreed to provide the information on the condition that names of the account holders need not be disclosed. They need to be persuaded not to insist on this condition. OECD has already formulated a model for exchange of information regarding such matters. No easy escape route by way of amnesty should be provided.

However, in case the Government is left with no alternative but to announce such a scheme it should be quite deterrent and stringent so that there should be no incentive to evade in future. It would be most inappropriate to think of an amnesty in regard to foreign money.

Hence the proper course would be to avoid it and get information and repatriation of such money through persuasive and diplomatic efforts.

(The author is a former Chairman of CBDT.)

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