Generation of Black Money in the Country

Generation of Black Money in the Country

There is no official estimation regarding the amount of black money generated in the country. Varying estimations of the amount of black money have been reported by different persons/institutions. Such estimations are based upon different sets of facts, data, methods, assumptions etc, leading to varying inferences. However, sectoral analysis of seizure of valuables and admission of undisclosed income in the searches conducted by the Income Tax Department in the last three financial years indicates that the main sectors in this regard are real estate, trading and manufacturing, contractors, gems and jewellery, services etc.

The Government has taken effective measures to curb the menace of black money. Such measures include (i) introduction of a comprehensive new law in the ongoing Budget Session 2015, specifically to deal with black money stashed abroad – The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 – inter alia, providing for stringent penalties (equal to three times the amount of tax payable) and prosecutions (rigorous imprisonment upto ten years with fine) in this regard; (ii) constitution of a Special Investigation Team (SIT) in May 2014, Chaired and Vice-Chaired by two former judges of the Hon’ble Supreme Court, inter alia, to deal with issues relating to black money stashed abroad; (iii) while focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest possible for credible deterrence against tax evasion; (iv) strengthening and streamlining the information collection and enforcement mechanism, inter alia, through extensive use of information technology, capacity building etc: (v) joining the global efforts to combat cross-border tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis facilitating exchange of information regarding persons hiding their money in offshore financial centres and tax havens; (vi) renegotiation of Double Taxation Avoidance Agreements with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions to facilitate the exchange of information and to bring transparency; (vii) Proactively engaging with foreign governments for exchange of information under the provisions of DTAAs/TIEAs/Multilateral Convention; (viii) exploring non-government sources to obtain information regarding undisclosed foreign assets; (ix) effectively utilizing the information received from treaty partners to combat tax evasion and avoidance.

This was stated by Shri Arun Jaitley, Union Finance Minister in written reply to a question in the Rajya Sabha today.

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Government Approves Nineteen (19) Proposals of Foreign Direct Investment Amounting to Rs. 2165.04 Crore Approximately

Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its Meeting held on 9^th April 2015, the Central Government has approved nineteen (19) proposals of Foreign Direct Investment(FDI) amounting to Rs. 2165.04 croreapproximately.

In addition to 32 agenda items listed for the meeting, the Board had also considered additional 10 proposals as tabled items.

Details of Proposals considered in the Foreign Investment Promotion Board (FIPB) Meeting held on 09.04.2015 are as under:

Following nineteen (19) proposals have been approved by the Government:

S. n.	Name of the applicant	Gist of the proposal		Sector		Proposed FDI (In Rs. crore)
1.	M/s Mylan Laboratories Limited, Hyderabad	M/s Mylan Laboratories Limited, Hyderabad seeks prior approval for increase in the level of FDI in the company by existing non-resident shareholders, MP Laboratories (Mauritius) Ltd. and Mylan Luxembourg 2 s.a.r.l., pursuant to a composite scheme of arrangement.		Pharma		Rs. 128.77 crore
2.	M/s Par Formulations Private Ltd. (PFPL)	The applicant has informed that for payment of the consideration stated in the Slump Sale Agreement, the Shareholders of PFPL would, singly or collectively, subscribe to additional fully paid up equity share capital of PFPL (by bringing in fresh foreign inward remittance), and PFPL will in turn use such fund for subscription/acquisition of 100% of the entire issued, subscribed and paid up equity share capital of NewCo. Ultimately, NewCo shall use such funds for the purpose of acquiring the Alathur Undertaking from Nuray.		Pharma		Rs. 124.00 crore
3.	M/s BioMerieux India Private Limited, New Delhi	i) M/s BioMerieux India Pvt Ltd., a WoS of M/s BioMerieux France has sought post facto approval for acquisition of 60% shareholding in M/s RAS Lifesciences Private Limited in July 2012. ii) Intimation given by the company regarding downstream Investment made in M/s RAS Lifesciences Private Limited		Pharma		Nil
4.	Ms. Maham Nayyer and Ms. Sahar Nayyer, Pakistan	Ms. Maham Nayyer and Ms. Sahar Nayyer, Pakistani citizen, has sought FIPB approval to import finished carpets from Dubai and other countries and trade it in India		Trading		Rs. 0.60crore
5.	M/s Partu Movies LLP, Mumbai	Approval has been sought by M/s Partu Movies LLP for a foreign investment of 99.997% to produce a Marathi feature film, namely “Partu”.		LLP		Rs. 3.10 crore
6.	M/s Fincare Business Services Private Limited, Bangalore	Approval is sought for permission for foreign investment by way of acquisition of shares in core investment company (CIC-NBFC) by swap of shares, and further investment up to 100% by way of primary/ secondary acquisition in M/s Fincare Business Services Private Limited, Bangalore.		Finance		Nil
7.	M/s Asomi Finance Private Limited, Assam	M/s Asomi Finance Private Limited, Assam, seeking approval for relaxation of the condition of not having complied with the minimum capitalization norms in the NBFC Sector.		Micro-Credit		Rs. 8.00 crore (already brought in)
8.	M/s Vayugrid Marketplace Services Private Limited, Maharastra	M/s Vayugrid Marketplace Services Private Limited, Maharashtra, is seeking approval for allotment of equity shares towards preliminary expenses for the incorporation of the company and to issue pending equity shares against share application money pending since takeover of a sister company since 31.03.2009.		Misc		Rs. 0.30 crore
9.	M/s Touchstone Trust, Hyderabad	M/s Touchstone Trust, Hyderabad, a registered AIF category II Fund is seeking permission to issue units in its scheme I to Individual Foreign Investors/ NRI’s.		Alter-native Invest-ment Fund (AIF)		Rs. 29.00 crores
10.	M/s Mitsui & Co India Pvt Ltd, New Delhi	Post-Facto approval has been sought by M/s Mitsui & Co India Pvt Ltd, a foreign owned company for making downstream investment in another Indian company.		Misc		Nil
11.	M/s FCC Clutch India Private Limited	Approval is sought by M/s FCC India to acquire additional 50% equity stake (represented by 39,50,000 equity shares) in M/s FCC Rico from M/s FCC Co Ltd, the consideration for which would be discharged by swap of shares wherein FCC India's equity shares would be issued to FCC Japan.		Manu-facturing		Rs. 444.50 crore
12.	M/s Data-mark Prodapt India BPO Pvt. Ltd.	M/s Datamark Prodapt India BPO Private Limited, Chennai seeks permission for conversion of Private Company limited by shares into a LLP.		LLP		Nil
13.	M/s RLG Retail Private Limited	The applicant has sought approval to enhance the foreign equity participation of M/s Richemont Services B.V. from existing 51% to 100% in M/s RLG Retail Private Limited, for undertaking single brand retail trading of ‘Cartier’ products in India.		Misc - Single Brand Retail		Rs. 31.00 crore
14.	M/s Decathlon S.A France.	M/s Decathlon SA France has sought approval for change of single brand from ‘Oxylane’ to ‘Decathlon’.		Misc - Single Brand Retail		Nil
15.	M/s Damiani India Private Limited	The applicant has sought approval to enhance the foreign equity participation of M/s Damiani International B.V. from existing 51% to 100%, by way of purchase of 49% shares from its own internal accruals by acquiring from existing shareholders of M/s Damiani India Pvt. Ltd.		Misc – Retail Trading		Rs. 3.34 crore
Tabled Items
16.	M/s Bharti AXA Life Insurance Company Limited		Bharti AXA Life Insurance Company Limited, A Joint venture between AXA India holdings and Bharti Insurance Holdings Private Limited has sought approval for (i) Transfer of 26.78% from Bharti Insurance Holdings Private Limited to AXA India holdings. (ii) Transfer of 10% held in First American Securities Private Limited from AXA India Holdings to Bharti group	Insu-rance	Rs. 858.60 crore
17.	Bharti AXA General Insurance Company Limited		Bharti AXA General Insurance Company Limited, a Joint venture between SocieteBeaujon and Bharti Insurance Holdings Private Limited has sought approval for (i) Transfer of 26.78% from Bharti Insurance Holdings Private Limited to SocieteBeaujon (ii) Transfer of 10% from SocieteBeaujon held in GIBA Holdings private Limited to Bharti group	Insu-rance	Rs. 431.40 crore
18.	M/s Curatio Healthcare (I) Private Limited		Approval has been sought by M/s Curatio Healthcare (I) Private Limited,a Brownfield pharma company for foreign investment of 33.33% by transfer of shares from resident shareholders to non-residents	Pharma	Rs. 93.43 crore
19.	M/s Augere Wireless Broadband India Private Limited		M/s Augere Wireless Broadband India Private Limited, an Indian telecom company, proposes to Increase foreign equity participation from 74% to 100%.	Telecom	Rs. 9.00 crore

The following ten (10) proposals were deferred:

s. n.	Name of the applicant	Gist of the proposal	Sector
1.	M/s Stericat Gut Strings Pvt. Ltd.	M/s Stericat Gut Strings Pvt. Ltd. seeks to sell 77.5% stake to M/s Groupe Peters Surgical LLC (22.5% of which would be via share swap).	Pharma
2.	M/s Blue Dart Express Limited	Approval has been sought by M/s Blue Dart Express Limited for the acquisition of shares in Blue dart Aviation Limited by way of purchase of shares from existing shareholders which would increasing the shareholding from 49%to 74%. Additionally 13% will be held by NRIs on a non-repatriable basis.	Civil Aviation
3.	M/s TPV Technology India Private Limited	M/s TPV Technology India Private Limited, Gurgaon is seeking permission for issue of shares to M/s TPV BVI and Mr. Jason HSUAN pursuant to scheme of demerger.	Misc (Demerger)
4.	M/s Big India Malls Pvt. Ltd.	M/s Big Shopping Centres Ltd Israel, having 24.14% investment in M/s Big India Malls Pvt. Ltd., New Delhi (a construction development company) proposes to repatriate FDI by selling current undeveloped plots for lack of committed funding from LEHMAN (an existing shareholder) and additional funding from other shareholders. The company has also sought permission for waiver of the condition for completion of 50% of the project.	Construction and Development
5.	M/s BASF Chemicals India Private Limited	M/s BASF Chemicals India Private Limited (BCIPL) proposes to convert the legal form of the Company from a private limited to a Limited Liability Partnership (“LLP”) under the Limited Liability Partnership Act, 2008.	Industry
Tabled Items
6.	M/s Vivimed Labs Limited	M/s Vivimed Labs Limited, Karnataka, brownfield pharmaceuticals company is seeking approval for issuance of warrants to a foreign investor	Pharma
7.	M/s O-zone Networks Private Limited	M/s O-zone Networks Private Limited Delhi, engaged in telecom sector and with 33.33% existing FDI from M/s AL Telecom Holdings (India) Limited, Cyprus, seeks approval for upto 100% foreign investment by M/s Ozone BV, Netherlands by way of purchase of the equity share capital existing foreign and domestic shareholders.	Internet services
8.	M/s Sharekhan Limited And M/s Human Value developers Pvt Ltd	Approval has been sought by Sharekhan Limited and M/s Human Value developers Pvt Ltd for the transfer of CCDs and CCPs of their companies held by IDFC limited to Baring Private Equity Asia IV Mauritius Holdings Limited.	NBFC
9.	M/s Indium IV (Mauritius) Limited through M/s India Value Fund IV	M/s India Value Fund IV (IVF IV) is seeking approval of FIPB for: (i) Making investment in an Indian Company i.e. M/s Atria Convergence Technologies Pvt. Ltd. (ACT) engaged in providing Internet Services (ISP). IVF IV and IVF III-A together proposes to invest in the capital of ACT in excess of 49% upto 100% by subscribing to equity/compulsorily convertible preference shares/fully convertible debentures. (ii) Making downstream investment in Companies engaged in ISP and Multi Subscriber Operator (MSO) activities.	Telecom & Broadcasting
10.	M/s Knowlarity Communi-cations Private Limited	M/s Knowlarity Communications Private Limited, engaged in providing telecom services, has sought an approval to transfer equity shares from existing investors and fresh issue of equity shares and CCPS to existing and new investor- leading to an increased FDI stake from 56.14% to 80.97%.	Telecom

The following twelve (12) proposals have been rejected:

s. n.	Name of the applicant	Gist of the proposal			Sector
1.	M/s Kusum Healthcare Private Limited, New Delhi	M/s Kusum Healthcare Private Limited, New Delhi, a brownfield pharmaceutical company has sought approval for issuing equity shares/CCPS/CCDs to M/s Upasa Holdings AG, Switzerland, leading to 25% shareholding in the applicant.			Pharma
2.	M/s Sudeep Pharma Private Limited, Gujarat	Approval has been sought by a Brownfield pharmaceutical company for transfer from existing shareholders and fresh issue of shares to a foreign company resulting in 50% FDI in the company.			Pharma
3.	M/s Conress Labs (India) Private Limited, Hyderabad	M/s Conress Labs (India) Private Limited, seeking post-facto approval for the downstream investments made in M/s Odisha Biotech Park Private Limited and M/s RCC Laboratories Private Limited.			Pharma
4.	M/s Sai Life Sciences Limited, Hyderabad	Approval has been sought by a Brownfield pharma company for transfer of shares from existing to new non-resident shareholders and further allotment of shares.			Pharma
5.	M/s Asergis Communications Private Limited, Delhi	M/s Asergis Communications Private Limited, Delhi, a new telecom company, has sought the approval for foreign equity participation of 100%.			Commu-nications
6.	M/s Nickelodeon Asia Holdings Pte. Ltd., Singapore	Approval has been sought by M/s Nickelodeon Asia Holdings Pte. Ltd., Singapore, to purchase the entire holdings of M/s Shinano Retail Private Limited, India in M/s Prism TV Private Limited.			Information & Broadcasting
7.	M/s S. Kumars Nationwide Limited	M/s S. Kumars Nationwide Limited seeks permission a share swap arrangement with M/s Indivest Pte. Ltd.			Manu-facturing
8.	M/s Barefoot Resorts & Leisure India Pvt. Ltd., Chennai	M/s Barefoot Resorts & Leisure India Pvt. Ltd., Chennai, operating in the hospitality business, has applied for post facto approval to regularize the allotment of partly paid up shares to M/s Fruition Resorts Limited, Mauritius.			Misc
9.	Mr. Phil Arthur Bedford, British National (Dubai Resident)	Mr. Phil Arthur Bedford, a British National and Dubai Resident has sought approval to set up an LLP in India which will act as the Master Franchisee of the Referral Institute, an institute engaged in providing consultation tools to help business professional to gain financial success through relation based referral marketing.			LLP
10.	M/s Warden Petrochem Pvt. Ltd.	The proposal is for conversion of company into LLP. The proposed LLP intends to do commodity trading and commission income. As per Clause 9(a) 1 of the draft LLP Agreement, the business of LLP would be to carry on the business of trading in commodities of all types, commission incomes of all types and holding of existing property.			LLP
11.	M/s VRL Impex& Services LLP	M/s VRL Impex & Services LLP is a recently formed Limited Liability Partnership(LLP) with 90 percent ownership by a NRI (Umang MadhukarJani) and 10 percent by a resident Indian (Sandhya MadhukarJani). The applicant has requested approval for NRI investment via LLP to the tune of Rupees Twenty Crores. At the moment, the NRI partner has sent Euro 1,000 only to his account with local Indian bank and same is kept pending for credit by the local Indian bank pending FIPB approval. The applicant has further informed that they intend to sell imported items to distributors (at state/Taluka/District etc level) and/or shop owners in small villages.
Tabled Items
12.	M/s Elanco India Private Limited		Approval has been sought by a Greenfield pharma company for the acquisition of its shares by a foreign company for the purpose of acquiring business of a Brownfield pharma company	Pharma

The following one (1) proposal was not considered by FIPB/did not lie before FIPB:

s. n.	Name of the applicant	Gist of the proposal	Sector
1.	M/s Becton Dickinson India Pvt Ltd	M/s Becton Dickinson India Pvt Ltd, a brownfield pharma company, has sought approval for issuance of equity shares/redeemable preference shares for further infusion of capital of USD 20 million by its parent company.	Pharma

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Provision in the Finance Bill, 2015, will not Affect the LPG Subsidy and Other Welfare Subsidies Received by Individuals

Certain doubts have been raised in a section of the media about the applicability of the official amendment moved in the Finance Bill, 2015 in the Lok Sabha on 30th April, 2015 with respect to definition of ‘income’.

Sub-section (2) of section 145 provides that the Central Government may notify Income Computation and Disclosure Standards (ICDS) for any class of assessees or for any class of income. The Central Board of Direct Taxes (‘CBDT’) notified ICDS on 31.3.2015 vide Notification number S.O. 892 (E) after wide consultations with the stakeholders for which the draft was placed in the public domain. The ICDS is applicable to persons having income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and following Mercantile System of Accounting. This is not applicable to individuals not having any income chargeable under the head “Profits and gains of business or profession” and receiving LPG subsidy or any other subsidy which is for the welfare of the individual. The Finance Bill, 2015 proposes to align the definition of Income with that provided in ICDS for this purpose. To restate the position, the provision in the Finance Bill, 2015, will not affect the LPG subsidy and other welfare subsidies received by individuals.

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Prime Minister to Launch Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Atal Pension Yojana (APY) on 9th May 2015 At Kolkata and Simultaneous Launch of the Schemes at 116 Locations Across the Country

Including at Lucknow by Home Minister Shri Rajnath Singh, at Mumbai by Finance Minister Shri Arun Jaitley and at Bhopal by External Affairs Minister Smt Sushma Swaraj Among Others

The Prime Minister Shri Narendra Modi will launch three ambitious Social Security Schemes pertaining to the insurance and pension sector on 9th May 2015 at Kolkata. This would be a path breaking initiative towards providing affordable universal access to essential social security protection in a convenient manner linked to auto-debit facility from the bank account of the subscriber. The two insurance schemes to be launched, namely Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY would provide insurance cover in the unfortunate event of death by any cause/death or disability due to an accident respectively , whereas the pension scheme, Atal Pension Yojana (APY), would address old age income security needs. The convenient delivery mechanism of the schemes is expected to address the situation of very low coverage of life/accident insurance and old age income security products in the country.

Besides the launch function at Kolkatta, simultaneous launch functions of the Schemes will also be held at 116 locations in the Capital and other major centres of the different States and at District Headquarters. Chief Ministers and Union Ministers will attend the functions at various locations in the country. Senior Union Ministers including the Home Minister Shri Rajnath Singh (Lucknow), Finance Minister Shri Arun Jaitley (Mumbai), External Affairs Minister Smt. Sushma Swaraj (Bhopal), Urban Development and Parliamentary Affairs Minister Shri Venkaiah Naidu (Varanasi), Food, Consumer Affairs and Public Distribution Minister Shri Ramvilas Paswan(Patna), Road Transport and Highways Minister Shri Nitin Gadkari (Bhagalpur), Minister of State for Skill Development and Entrepreneurship(Independent Charge) Shri Rajiv Pratap Rudy (Delhi), Health and Family Welfare Minister Shri Jagat Prakash Nadda (Shimla), Minority Affairs Minister Smt. Najma Heptulla (Srinagar), Chemicals and Fertilizers Minister Shri Ananth Kumar (Bengaluru), Minister of State for Commerce and Industry (Independent Charge) Smt. Nirmala Sitharaman (Thiruvanthapuram), Agriculture Minister Shri Radhamohan Singh (Chennai), Minister of State for Power and Coal (Independent Charge) Shri Piyush Goyal (Coimbatore) and Minister of State for Minority and Parliamentary Affairs Shri Mukhtar Abbas Naqvi (Allahabad) will attend the launch functions among others at these locations.

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The Government had commissioned a study, inter alia, on estimation of unaccounted income and wealth inside and outside the country, which was conducted by National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM). One of the terms of reference of the study was – “To identify important sectors of economy in which unaccounted money is generated and examine causes and conditions that result in generation of unaccounted money”. Reports received from these Institutes are under examination of the Government.

There is no official estimation regarding the amount of black money generated in the country. Varying estimations of the amount of black money have been reported by different persons/institutions. Such estimations are based upon different sets of facts, data, methods, assumptions etc, leading to varying inferences. However, sectoral analysis of seizure of valuables and admission of undisclosed income in the searches conducted by the Income Tax Department in the last three financial years indicates that the main sectors in this regard are real estate, trading and manufacturing, contractors, gems and jewellery, services etc.

The Government has taken effective measures to curb the menace of black money. Such measures include (i) introduction of a comprehensive new law in the ongoing Budget Session 2015, specifically to deal with black money stashed abroad – The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 – inter alia, providing for stringent penalties (equal to three times the amount of tax payable) and prosecutions (rigorous imprisonment upto ten years with fine) in this regard; (ii) constitution of a Special Investigation Team (SIT) in May 2014, Chaired and Vice-Chaired by two former judges of the Hon’ble Supreme Court, inter alia, to deal with issues relating to black money stashed abroad; (iii) while focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest possible for credible deterrence against tax evasion; (iv) strengthening and streamlining the information collection and enforcement mechanism, inter alia, through extensive use of information technology, capacity building etc: (v) joining the global efforts to combat cross-border tax evasion and tax fraud and to promote international tax compliance, including supporting the implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis facilitating exchange of information regarding persons hiding their money in offshore financial centres and tax havens; (vi) renegotiation of Double Taxation Avoidance Agreements with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions to facilitate the exchange of information and to bring transparency; (vii) Proactively engaging with foreign governments for exchange of information under the provisions of DTAAs/TIEAs/Multilateral Convention; (viii) exploring non-government sources to obtain information regarding undisclosed foreign assets; (ix) effectively utilizing the information received from treaty partners to combat tax evasion and avoidance.

This was stated by Shri Arun Jaitley, Union Finance Minister in written reply to a question in the Rajya Sabha today.

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Incentivizing States Under GST Regime

As tax rates during Goods and Services Tax (GST) regime will be closely aligned to the Revenue Neutral Rates (RNR) of the Centre and the States, the revenues of the Central and State Governments will not be impacted in the long run. To help States in the transition phase, the Constitution (122nd Amendment) Bill, 2014, which was introduced in the Lok Sabha on 19.12.2014 for amending the Constitution to facilitate introduction of GST in the country provides for;

• Levy of an additional tax of goods, not exceeding one per cent in the course of inter-state trade or commerce to be collected by the Government of India for a period of two years, and assigned to the States from where the supply originates;

• Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period which may extend to five years;

• In the case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation of the Goods and Service Tax Council.

This was stated by Shri Arun Jaitley, Union Finance Minister in written reply to a question in the Rajya Sabha today.

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