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The Big Picture – Black Money Bill: Will it be effective?

Summary:

The debate regarding black money stashed abroad and bringing it back has been raging for quite

some time now. The present government which had promised to get black money back has been

taking some promising steps. Recently, the union cabinet cleared a bill which seeks to impose harsh

penalties along rigorous imprisonment for those found with black money.

One of the provisions in the bill seeks to have a kind of amnesty scheme. There are presently 6

amnesty schemes in India. The government of India had given an undertaking in the Supreme Court

that there will not be any such schemes further. There is allegation that such amnesty schemes help

black money holders convert their money into white. Such schemes support offenders and honest

tax payers are also likely to become dishonest.

Since there are around 90 tax havens, it becomes difficult to calculate the exact amount of black

money stashed away abroad. Only few hundred names of black money holders have been disclosed

till today. The new bill also aims at curbing further generation of black money. Experts also point out

that the generation of black money starts with the demand for it. The biggest demand creators for

black money are political parties for election expenditure along with some other sectors. Even

informal sectors generate black money.

Some experts even say that proper implementation of the existing laws would solve much of the

problem. There is a need to develop dedicated court system which can punish in the shortest

possible time. There is a need for strong political will to properly implement the existing laws. It is

also true that tax rates in India are high. And this increases the tendency to evade the taxes. Hence

proper laws to reduce tax evasions are also required.