Rajeev Chandrasekhar's official website - Member of Parliament

GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF REVENUE 

RAJYA SABHA
UNSTARRED QUESTION NO. 829
ANSWERED ON TUESDAY, MARCH 5, 2013 / PHALGUNA 14, 1934 (SAKA) 

QUESTION
Size of Black Economy in the Country 

829. SHRI RAJEEV CHANDRASHEKHAR 

Will the Minister of FINANCE be pleased to state: 

(a)   whether Government is aware of a recent report by Global Financial Integrity on black money, which pegs India at the eight position in terms of black money outflow; 

(b)   whether Government is also aware of a recent study conducted by National Institute of Public Finance and Policy (NIPFP) stating that the black money outflow almost amounts to 10 per cent of GDP;

(c)    if so, what is Government's estimates on the size of the black economy; and 

(d)   the steps Government has taken to curtail and reduce the black economy? 

ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI S.S. PALANIMANICKAM)

(a) Yes, Sir. There is a report by Global Financial Integrity (December, 2012). 

(b) No, Sir. However, the Government has commissioned a study, inter alia, on estimation of unaccounted income and wealth both inside and outside the country. The study is being conducted by three institutes - National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM) separately. The study reports are still in the process of finalisation by the respective institutes. 

(c) Does not arise in view of reply to part (b) above. 

(d) Drive against tax evasion is an ongoing process. Appropriate action under Direct Taxes laws including levy of penalty and launching of prosecution are taken whenever cases of tax evasion are detected. The Government has taken various steps under a multi-pronged strategy which includes creating an appropriate legislative framework; setting up institutions to deal with illicit funds; developing systems for implementation; imparting skills to the manpower for effective action; and joining the Global crusade against black money. Legislative measures taken through the Finance Act, 2012 in this regard include introduction of provisions requiring reporting of assets (including bank accounts) held outside the country; reopening of assessments up-to 16 years for taxing undisclosed assets (including bank accounts) kept outside the country; strengthening of penal provisions in respect of search cases; expansion of the ambit of tax collection at source (TCS) to cover certain more vulnerable items I sectors. India has been renegotiating its Double Taxation Avoidance Agreements (DTAAs) with other countries to bring the Article on Exchange of Information to International standards, and has also been expanding its treaty network by signing new DTAAs with many other countries and by entering into Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions in its effort to facilitate the exchange of information and to bring in tax transparency. It has also become a member of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2012. Various steps have also been taken to improve intelligence gathering mechanism of the Department. These steps have equipped the Government better in tackling the menace of tax evasion.