Finance, Forex and Investments

What is your view on the Back-door amnesty scheme introduced by UPA for secret Money stashed abroad ?

At Para 146 of the Budget Speech, the Finance Minister said, “It has been represented that the taxation of foreign dividends in the hands of resident taxpayers at full rate is a disincentive for their repatriation to India and they continue to remain invested abroad. For the year 2011-12, I propose a lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary. I do hope these funds will now flow to India”. New Section 115BBD The newly inserted Section 158BBD inserted with effect from April 1, 2012 declares, Where the total income of an assessee, being an Indian company, for the previous year relevant to the assessment year beginning on the first day of April, 2012 includes any income by way of dividends declared, distributed or paid by a subsidiary foreign company, the income tax payable shall be the aggregate of the amount of income tax calculated on the income by way of such dividends, at the rate of 15 per cent. Not many will understand the implications of the newly inserted Section 115BBD. If an industrial house has secreted away funds in a Swiss bank account, it will now get an opportunity to bring back the money and legitimise the same by paying the concessional rate of tax. All that it has to do is to set up a subsidiary in one of the innumerable tax havens and transfer funds from the secret Swiss bank account to the account of the newly formed subsidiary in another bank. The subsidiary will then send the moneys by way of dividends to the Indian holding company after creating a pretence of doing financial consultancy work in the tax havens. It would appear the tax havens abroad will only be too eager to register such subsidiary in as short a time as possible. Remittance from the tax havens to the Indian account of the holding company in India will suffer a tax of 15 per cent. This tax rate is much lower than the rate of 18 per cent levied by Singapore. That is half of the rate that firms and individuals pay in India. No questions will be asked since tax has been paid. Black money in Swiss bank account can now be legitimised. No wonder, those reading the fine print in the Budget papers have “spotted the beauty of the 15 per cent tax rule” and called it a back-door amnesty scheme. It should be noted that the newly inserted Section 115BBD will be in operation only for one year, i.e the financial year ending 31.03.2012 relevant to the assessment year 2012-13. Make hay while the sun shines. http://www.thehindubusinessline.com/industry-and-economy/taxation-and-accounts/article2035418.ece?homepage=true

Public Comments

1. They have done so to save their corrupt partners from the anti corruption movement launched by Baba Ramadev ji. He has been demanding that black money deposited in foreign banks should be declared as national property.Hence ,they want to save 85%
2. Remember when they brought VDIS ? This is the same "Safe Passage" given to the "Corrupt Congressis" and its allies like Hasan Ali ( and his allies )
3. I like their similar actions. I don't like Baba Ramdev like fighters. I love legal corruption.