Transaction and Compliance Costs to Rise with More Powers to Agencies to “Curb Black Money”

Finance Minister Arun Jaitley will announce policy initiatives on some of the key recommendations made by the Special Investigation Team (SIT) on black money headed by Retired Judge Arijit Pasayat to combat the “menace of illicit funds stashed within the country and overseas”.

The SIT has suggested over a dozen measures to the government to check “black economy” in the country.

Sharing of information between law enforcement agencies and amendments in anti-money laundering laws and Income Tax Act are on the anvil in the Budget.

The Permanent Account Number (PAN), issued by the Income Tax department to assist in revenue could be used to harass the tax payer with free flow of the database along with income tax returns to the Government agencies. This may violate the privacy of business but that is a secondary consideration.

Tax evasion could be termed a “crime” in the country which will mean immediate arrest and custody/jail in cases of suspected evasion even in grey areas.

A framework for sharing of information between agencies like the Financial Intelligence Unit (FIU) and the Enforcement Directorate (ED), Customs snoop and Intelligence Bureau could also find a mention in the budget speech of the Finance Minister.

A KYC Registry drawn from the Bank database is suggested by the SIT, for access to enforcement agencies for action against “money launderers, tax evaders and violators of economic laws”. This may be a source of harassment in vendetta campaigns against opponents of the Government.

This is a move to amend the Foreign Exchange Management Act (FEMA) to seize and confiscate assets based abroad without due process. This will give the Government a handle to seize assets in cases where the authorities on the other side do not raise objections on grounds of jurisdiction and clash between the laws of two countries.