Economy

KEY POINTS

Parallel Economy

·         When an economic activity goes unreported or not measured by society’s current techniques, it falls under parallel economy.

·         Parallel economy indicates that money that has neither been reported to the public authorities at the time of their generation or at any time of possession; no taxes have been paid on it.

·         It may includes –

a)     Money laundering

b)     Smuggling

c)      Tax evasion and

d)     Economic activities outside law and regulations.

Steps taken by GOI

·         Constitution of the Special Investigation Team (SIT) on Black Money.

·         Enactment of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to specifically deal with black money stashed away abroad.

·         Constitution of Multi-Agency Group (MAG) consisting of officers of CBDT, RBI, ED and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks.

·         Pro-actively engaging with foreign governments with a view to facilitate and enhance the exchange of information under Double Taxation Avoidance Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions.

·         Pro-actively furthering global efforts to combat tax evasion/black money, inter alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA).

·         Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards.

·         Three major international double tax avoidance treaties with Mauritius, Cyprus and Singapore have been rewritten.

·         Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 with a view to enable confiscation of Benami property and prosecution of benamidar and the beneficial owner.

·         Initiation of the information technology based ‘Project Insight’ for strengthening the non-intrusive, information driven approach for improving tax compliance.

·         Introduction of Income Disclosure Scheme to disclose income which has escaped assessment.

·         Government declared that 500 and 1000 rupee bank notes are no longer legal tender, in order to eradicate black money.  

·         Launching of ‘Operation Clean Money’ for collection, collation and analysis of information on cash transactions post demonetisation.