Government has given another blow to parallel economy by signing an agreement with Switzerland for automatic exchange of information or AEOI. This agreement will help India in obtaining all information on transactions made by Resident Indians to Swiss banks. Indian government has no official estimation of black money stashed in Swiss bank accounts. Government of Switzerland and Swiss Bankers Association says that Indians hold approximately US $ 2 billion in Switzerland but some reports claim the amount to be over US $ 1 trillion. Let’s find out the key aspects of this new agreement.
Key points of agreement for automatic exchange of information
This is just another battle won by us in our war against corruption, terrorism and parallel economy. India has been very proactive recently in its fight against counterfeit money which is visible through the steps taken by its government in the past.
Other steps taken recently to paralyze parallel economy
Government introduced a new law “The Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 to derail parallel economy.
It also rolled out Amnesty Scheme in 2015 to reveal black money held in the form of foreign assets and a similar scheme by the name of Income Declaration Scheme in 2016 to reveal black money stacked in India.
Amnesty Scheme which resulted in 648 declarations didn’t garner much success but Income Declaration Scheme was highly successful in revealing black money. Approximately 65,000 taxpayers declared black money worth Rs. 75,000 crores.
The recent move by the government to demonetize 500 and 1,000 rupees notes and the success it received further strengthened India’s stance against corruption and parallel economy. Demonetization which came into effect on 8 November was not only launched to remove black money out of the system but also to tie the helping hands of terrorism.
Benami Property Act came into effect on November 1, 2016, just before demonetization scheme to expose black money held in the form of immovable property or assets.
Other than these major steps, several other measures like policy-level reforms, improved enforcement ground action, establishment of robust administrative and legislative framework and increased use of information technology for information integration and data mining have been initiated in the recent past.