Topic: Money laundering and its prevention.
5. What do you understand by round tripping? Discuss the concerns associated and suggest ways to address them. (250 words)
Reference: The Hindu
Why this question:
In a major relief for New Delhi Television Limited (NDTV), the Supreme Court has quashed an income tax re-assessment notice issued by revenue authorities against the premier news broadcasting company. Thus the question.
Key demand of the question:
Explain the concept of round tripping and discuss the concerns associated and suggest ways to address them.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Briefly define round tripping. Discuss the concerns associated and suggest ways to address them.
Round tripping refers to money that leaves the country though various channels and makes its way back into the country often as foreign investment. This mostly involves black money and is allegedly often used for stock price manipulation. Round tripping is often done through a series of transactions that don’t have any substantial commercial purposes, which makes it fall within the trappings of GAAR. List down the concerns associated with round tripping. Detail upon the efforts being taken the government in this direction.
Conclude by suggesting measures to tackle them.