New Delhi: A parliamentary standing committee has called for finalisation of the long-delayed Direct Taxes Code at the earliest to curb black money by simplifying and rationalising the direct tax laws in the country.
In its preliminary report tabled in Parliament on Monday on the unaccounted income/wealth both inside and outside the country, the committee implored the Department of Revenue for greater vigour to unearth the black money.
The committee, comprising MPs of both the Houses of Parliament and headed by former Union minister M Veerappa Moily of the Congress, also called for follow-up action of the department of revenue on seven reports of the Special Investigation Team (SIT) on black money as well as three reports on estimation of unaccounted money.
Besides legislative and administrative efforts, the judiciary also took note of the menace of black money and at the instance of the Supreme Court, the government in May 2014 constituted the SIT of its two former judges who have so far filed seven reports to the Apex Court.
The committee admits that a reliable estimate of the unaccounted wealth inside and outside country is "difficult" in view of the varied estimates arrived by three institutes tasked by the government in 2010, namely National Institute of Public Policy and Finance, National Council of Applied Economic Research and the National Institute of Financial Management.
Based on studies of three expert institutions, the committee notes that the sectors where unaccounted income is found to be the highest include "real estate, mining, pharmaceuticals, pan masala, gutka and tobacco industry, bullion and commodity markets, film industry, educational institutes and professionals." It says other sectors namely security markets and manufacturing also showed high incidence of unaccounted income.
The report, submitted to then Lok Sabha Speaker Sumitra Mahajan in March, says the detailed recommendations on the subject will be filed after completing all evidences, pending which the Department of Revenue should furnish Action Taken Replies (ATRs) to the committee within three months.
The committee said its preliminary report, which was tabled in both the Houses by their respective secretary generals, is based on evidences of the department and the Central Board of Direct Taxes (CBDT).
Noting that the unaccounted income is income from the economic activities circumventing or otherwise avoiding government regulations and taxation, the report covers all illegal economic activities, i.e. "trade with stolen goods; drug dealing, manufacturing; prostitution; gambling; smuggling; fraud; and like others, non-monetary illegal economic activities, i.e., Barter of
drugs, stolen goods, smuggling, theft for own use, and like others. It also covers income from legal economic activities where tax is evaded, i.e. unreported income from self employment; wages, salaries and assets from unreported work related to legal services and goods."
It says: "Black income activity does not end with generating black/unaccounted income; it also results in black consumption and black saving, which when accumulated results in black/unaccounted wealth.
Black wealth itself is held in various forms – almost all the forms in which white wealth is held, whether in cash, fixed deposits with banks, other financial assets or tangible assets. Black money is that part of black wealth which is held in the form of money (currency plus demand deposit of banks)."
The committee refers to separate studies by three institutes instituted by the government in 2010 on the basis of an earlier standing committee report calling for "a thorough survey "on unaccounted income/wealth, particularly bringing out the nature of activities engendering money laundering both inside and outside the country with its ramifications on national security."