India Lost Rs 17 Trillion To Tax Havens Outside The Country In Four Decades
According to an analysis of classified central bank data by Hindustan Times, Indians exported Rs 17 trillion-worth goods and services over the last four decades and did not remit the equal amount in foreign exchange.
The amount which accounts to one-fourth of India’s current GDP is believed to have been stashed in tax havens outside the country.
The analysis of the Reserve Bank of India (RBI) data of a time between 1972 and 2015 shows that 95% of the Rs 17 trillion-worth exports were siphoned off over the last 10 years.
The data is based on 1,88,605 transactions that were not remitted home – as required under Indian foreign exchange rules. Though there’s possibility that some payments were stuck due to genuine reasons, but most of the data showed an increase in under-recovered payments over years.
It has been found that businesses under-invoice their exports and over-invoice their imports from tax havens such as Singapore, UAE and Hong Kong. Money laundering in stocks is also among a variety of activities long suspected to have been used to avoid taxes.
This is one of the major routes of how black money gets stashed abroad.
In 2011, the India’s top court appointed a Special Investigation Team (SIT) to make an assessment of dishonest wealth, both domestic and abroad. The panel was formed in 2014 after Narendra Modi became the PM of the country. SIT sought help from the RBI to unearth dodgy export deals. However, telephone calls and text messages to SIT chairman MB Shah for a response remained unanswered. A detailed email to RBI spokesperson did not elicit a response.
In 1988, a rare study by the Central Economic Intelligence Bureau (CEIB) estimated that Rs 13,000 crore of exports were not remitted to India. Some of the amount was recovered. But, according to the latest RBI data, realisation of more than Rs 3200 crores from that period is still pending.
India ranked fourth in black money outflows with more than Rs 500 billion siphoned out of the country a year during 2004-2013, the Global Financial Integrity (GFI’s) 2015 report said.
Please read the full article at Hindustan Times