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Panama Papers expose rich Indians’ tax dens; Modi announces big time probe

New Delhi: Prime Minister Narendra Modi on Monday ordered a multi-agency probe team on the global Panama Papers expose which names 500 Indians for alleged offshore holdings and vowed to take action against all unlawful accounts held abroad.

Within hours of the news break, India’s rich and famous made it to world headlines as the revelations sparked global investigations.

India's prime minister Narendra Modi/ AFPIndia's prime minister Narendra Modi/ AFP

India’s prime minister Narendra Modi/ AFP

In its explainer on the Panama Papers, CNN says the leaked documents do not necessarily indicate illegal activity.

Among the 500 Indians named for secret offshore dealings, Amitabh Bachchan and Aishwarya Rai Bachchan also find mention in documents recovered from Mossack Fonseca, a law firm based in tax haven Panama.

Business Standard says the report suggests that many of the Indians, featured in this leak and who set up these offshore entities prior to 2013, “are likely in violation of the Reserve Bank of India’s Liberalised Remittance Scheme — introduced in February 2004.”

“A multi-agency group is being formed to monitor the black money trail,” Finance Minister Arun Jaitley said here after the expose was published in The Indian Express. “Details of the assets worth Rs.6,500 crore has already been found,” he added.

As per a statement issued by his ministry, the probe team will comprise officers from the Central Board of Direct Taxes’ Financial Intelligence Unit, its Tax Research Unit as also officials from the Reserve Bank of India.

“The group will monitor the flow of information in each one of the case. The government will take all the necessary actions as required to get maximum information from all sources including from foreign governments to help in the investigation process,” the statement added.

The journalists’ consortium had said late on Sunday that its members and more than 100 other news organisations around the globe have found offshore links of some of the planet’s most prominent people. The list included over 500 Indians.

The details of the Indians with such offshore funds were published in The Indian Express. But whether or not such funds exist, and also if they were illegal is what the probe team ordered by Modi is expected to look into.

“In terms of size, the Panama Papers is likely the biggest leak of inside information in history – more than 11.5 million documents – and it is equally likely to be one of the most explosive in the nature of its revelations,” the consortium said of its investigation published.

In the context of the commitment of the central government to bring out undisclosed money both from abroad and from within the country, information brought out by any investigative journalism was welcome, the finance ministry said.

The ministry said in the past too, based on the investigations by ICIJ in 2013 — that showed the links of 700 Indians with business connection with off-shore entities — the agencies of the government were able to identify 434 persons as Indian residents.

It also said 184 persons admitted their relationship with such off-shore entities/transactions.

“Although, in the previous report of ICIJ, information relating to financial transactions/bank accounts was not available, the government authorities have detected credit in the undisclosed foreign accounts of such Indian persons in excess of Rs.2,000 crores.”

As a consequence, 52 prosecution complaints have been filed against the alleged offenders so far.

“The government is committed to detecting and preventing the generation of black money. In this context the expose of Panama Papers will further help the government in meeting the objective,” the finance ministry added.

The government expressed concern that tax havens were making countries like India suffer tax losses.

“The recent initiative of ‘Base Erosion’ and ‘Profit Shifting’ (BEPS) will help India and other countries in checking the practice of tax-avoidance through such tax havens. India is also fully committed to the BEPS initiative.”

In India, The Indian Express ran several pages of the investigation reports alleging, among other names, Bollywood superstarts Amitabh Bachchan and Aishwarya Rai, being directors in companies in Panama.

The two did not immediately respond despite efforts to contact them. Aishwarya Rai’s media adviser told the newspaper that the information was false. The spokesperson for Aishwarya Rai said “no” when IANS asked her if she intended to issue a statement.

Among those named in the report were Sameer Gehlaut of India Bulls and K.P. Singh of DLF. Vinod Adani, elder brother of industrialist Gautam Adani, politician Shishir Bajoria from West Bengal and Anurag Kejriwal of Loksatta Party were also alleged to have set up companies in tax havens.

Bajoria told the paper that that “erroneous beneficial owner information” was given by mistake.

The Express said it had carried out the investigations spread over eight months with several global newspapers. Many of the other persons named in the Express reports responded, some denying while others maintaining that they had worked within the laws of the country.

Among the global leaders named were 12 current and former world leaders, including Pakistan Prime Minister Nawaz Sharif’s family members. It also sought to reveal how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow firms.

In Russia, the state-run media organisations were silent on the subject. In Pakistan, however, Sharif’s son Hussain told Geo News that his family had not done anything wrong.


Panama Papers: Investigation of 500 Indians as per new anti black money law

New Delhi: The monitoring and investigation into the cases of 500 Indians being named in the leaked ‘Panama Papers’ will be conducted under the stringent provisions of the new law to combat the menace of black money generated by Indians in foreign shores.

Officials said the multi-agency group probe will be led by the investigations wing of the Central Board of Direct Taxes (CBDT), which, along with its foreign taxation wing and those of the RBI and Financial Intelligence Unit (FIU), will work on the latest disclosures.

Aishwarya Rai. GettyImagesAishwarya Rai. GettyImages

Aishwarya Rai. GettyImages

The new anti-black money law, termed the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, was enacted last year and operationalised from July 1.

“The work starts with Special Investigation Team on black money writing to the International Consortium of Investigative Journalists (ICIJ) to obtain full details about the Panama Papers case in respect to Indians. That will clear the picture about the extent of violation, money laundering and tax evasion done in these cases.

“There is some information in this regard with the multi-agency centre and the FIU, RBI and foreign tax wing of the CBDT are obtaining further details. The investigation and any possible prosecution action in this case will be done as per the provisions stipulated under the new anti-black money Act,” official sources said.

The overseas illegal assets cases were being dealt under the Income Tax Act, 1961 till now.

The new law imposes a steep 120 per cent of tax and penalty on un-disclosed foreign assets and income besides a jail term of up to 10 years.

The government had also provided a one-time compliance window before operationalising this Act and those who did not use it and are detected in contravention of laws after the window closes, they will be required to pay 30 per cent tax, 90 per cent penalty and face criminal prosecution.

Also, those caught holding illegal foreign assets also stand to face action by the Enforcement Directorate (ED) as the government last year had made an offence under the new act a “predicate offence” under the Prevention of Money Laundering Act (PMLA) and hence the entity or individual can also be criminally prosecuted under anti-money laundering laws now.
The SIT on black money had recommended to the government

in December, 2014 that tax evasion done by generating black funds or assets abroad should be made a serious “criminal offence” under Indian laws to force foreign countries to reveal the names and account details of Indians holding illicit wealth abroad.

The ED will also be acting upon these cases as soon as information is received by the multi-agency group and the SIT, they said.

Finance Minister Arun Jaitley today told reporters that Prime Minister Narendra Modi had discussed the issue with him and on his advise the group was created.

His comments came on a day the Indian Express newspaper carried a report based on leaked documents of a Panama-based law firm Mossack Fonseca which is said to feature links of over 500 Indians to firms and accounts in offshore tax havens.

This included a well-known actor and his daughter-in-law, a leading real estate tycoon and a number of other industrialists and their family members, most of whom have denied any wrongdoing.

The newspaper claimed that the list included foundations and trusts and passport details of 234 Indians. ICIJ however added a disclaimer that there are also “legitimate uses for offshore companies”.