Tax Return and Black Money

Tax Returns and Black Money
This refers to the news item Taxman may soon keep 24X7 watch on crorepatis(ET, 3 June2011). The proposal to have dedicated cell to monitor earnings and spending of rich tax payers is welcome and it may have some deterrent effect on the evasion and avoidance of taxes in the long run. But this may not be sufficient to prevent generation of black money in the economy.

Plugging all possible loopholes where black money generation is suspected is what is needed and it should not be difficult to achieve this initially by insisting on all assessees of income tax to declare all their moveable, immoveable assets and liabilities in the income tax returns. Black money generation is in the system itself and that only perusal of returns of High Networth Individuals and that too wealth tax returns may not mean much although it has a message.

The money circulation in cash form needs to be drastiaclly curbed and all transactions say Rs 5000 and above should be by means of cheque or plasic cards.Even very wealthy and top busines people insist for cash payments and this needs to be curbed. This will also track financial exclusion experienced in the system. This should start with real estae jewellery and commodities market. The transactions above a cut off point need to be tracked through PAN numbers and even transactions through cheques and plasic cards should carry PAN numbers. The objective is to minimise black money and its further generation and it needs to be tackled through different means. Keeping a very close watch where corruption is rampant would help bring down black money. Very signal that black money transaction in any manner would be tracked by all means would do the trick to a great extent. Incidentally such a move would further strengten the banking system and improve the much needed financial inclusion.

T.V.Gopalakrishnan.