New Delhi: India said it plans tougher punishments including jail terms of up to 10 years for those who hide undeclared cash outside the country and for the banks and advisers who help them, as it tries to bring back illicit billions stashed abroad.
In his Budget address on Saturday, Finance Minister Arun Jaitley said the government would introduce the changes in a new law during the current session of Parliament, which will also allow enforcement agencies to seize assets held abroad.
The hidden cash "eats into the vitals of our economy and society," Jaitley said. "The problems of poverty and inequity cannot be eliminated unless generation of black money and its concealment is dealt with effectively and forcefully."
Illegal deposits abroad cost India billions of dollars in lost revenue and Prime Minister Narendra Modi's government has promised to change laws and enact new measures to bring back such funds, known in India as 'black money'.
Evading tax on foreign assets will carry a jail sentence of up to 10 years, under the government's proposed changes, while failing to disclose assets adequately will be punishable by up to 7 years.
When assets abroad cannot be forfeited, the new rules could allow the government to confiscate equivalent assets in India.
India has also struck a deal with Swiss authorities, which will provide information for cases being investigated at home. The two sides have begun talks on an automatic exchange of information, Jaitley said.
Earlier this month, Indian tax officials searched the Mumbai headquarters of HSBC Holdings as part of a broader probe related to allegations the bank's Swiss business helped clients dodge taxes. India has been the only Asian country to aggressively investigate HSBC over the matter.
The black money changes come in a full-year Budget that seeks to encourage investment in India with lower corporate tax eventually and simpler process, but also to increase fiscal revenue.
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