Cabinet approves black money law, but will it bring in 'illegal funds' from Swiss banks?

In the run up to the general elections 2014, Prime Minister Narendra Modi had people especially the youth eating out of his hands. They listened to him with rapt attention, starry-eyed and salivating when he said ad nauseam that the black money illicitly stashed away abroad would be gotten back within 100 days of assuming office and each citizen’s bank account would be credited with Rs 15 lakh from out of the amount thus retrieved. That was the rashest promise one could make, the one he must be ruing even though it must be admitted it was indeed a vote catcher. In a country accustomed to freebies, anything on offer sans efforts and payment is not only lapped up with two eager hands but fought for fiercely if denied on the ground that election promises are cast in stone! In fact, in Tamil Nadu, notorious for competitive freebies by rival political parties, denizens of villages lay siege to ministers if they get a whiff of freebies having been handed over to the denizens of the neighboring village first. Be that as it may.[caption id=“attachment_2023049” align=“alignleft” width=“380”]  Hidden money. Reuters[/caption] Modi and Jaitley know the loot salted away abroad cannot be retrieved except in trickles that might ultimately tote upto a minuscule fraction of $1,500 billion, the guesstimated amount supposedly stashed away. Amit Shah, their party president, came to their rescue by shrugging of the poll-eve promise as jumla, a promise made with rhetorical flourish. When that didn’t wash with the irate voters, the government has hit upon a plausibly sincere course – make a special legislation with draconian provisions that would supposedly put the fear of God into the offenders besides placating the disappointed electorate. The Undisclosed Foreign income and assets (imposition of tax) Bill, 2015 (the Bill) is the result. It would be preceded by a limited amnesty scheme pursuant to which offenders can come clean without being visited with the stiff penalty and jail term contemplated by the law in making. In other words, they will have to pay the normal tax, interest thereon and the normal penalty under the Income-tax Act 1961. The penalty under the income tax law can range from 100 percent to 300 percent at the discretion of the commissioner which is a discretionary power that lends itself to misuse in a spirit of you-scratch-my-back-I-will-yours. The law in the making steers clear of this mistake when it seeks to impose a 300 percent penalty, period, with only the jail term being upto 10 years. This means it is for the trial courts to decide the period of incarceration, with the monetary penalty itself being outside the pale of discretion. Settlement Commission would be out of bounds for such offenders. It must be noted that Settlement Commission smacks of hush-hush deals consummated behind closed doors. Mercifully, its portals can be entered but once in one’s lifetime but the Bill says for those stashing away assets abroad even this one time confession would not be permitted. Time was when crooks would blithely make repeated confessions before it year after year with the same nonchalance with which they would participate in the quinquennial tax amnesty schemes despite the last-chance-to-return-to-the-path-of-rectitude warning in each scheme that was more a reflection of government’s impotence and pusillanimity. The billion dollar question however is whether the Bill too is bluster from the flustered government. The limited success we have had so far in nabbing Indians stashing away their wealth abroad have been entirely due to foreign whistleblowers. Our Enforcement Directorate and CBI have been found out of their depths in establishing the money trail from India to secretive foreign destinations. Crooks know this, and must be silently laughing up their sleeves. The point is the Indian government cannot act in isolation. Indeed it has to rope in the services of foreign governments. It is here it hits the obstinate and impregnable wall despite friendly and appropriate noises made by OECD. The world order is skewed in favor of economic power houses. The US government asked for and got the list of some 5,000 tax evaders hiding their money in the Swiss bank, UBS. Switzerland knew that it dare not tangle with the US government because the who is who of Zurich based Swiss banks have a dominant presence in Manhattan and the US government would make life difficult for them if it persisted with its banking secrecy law as a pretext for non-cooperation. India is perceived to be a weakling.