In a bid to crackdown on money launderers and tax evaders, Finance Minister Arun Jaitley said that the penalising powers of economic crime-fighting agency Enforcement Directorate should be used “expeditiously” in cases of non- compliance.
Speaking at the Enforcement Day event in Delhi, Jaitley called on the agency to “strictly” enforce law to help the exchequer raise legitimate revenue.
He felt that non-compliance of tax laws has always hit the larger public and national interest.
“And that is why the revenue department and the ED have a very important role to play,” he emphasised. “There is an expectation of compliance and in the event of non-compliance, there is the power of penalising that the ED has. This power has to be expeditiously used whenever violations are detected.”
Stating that the government has given citizens the right to deal in foreign exchange with a sense of trust, he said serious offence of money laundering, including using hawala channels, flight of capital out of the country, round tripping of funds and creation of shell companies to avoid taxes have become a “very standardised practice”.
Jaitley said these violations are not difficult to detect and scrutiny of filing with registrar of companies can also lead to the detection.
“The entire route of multi-layering through which the money laundering takes place… it is matter of a few minutes to detect how the violation takes place,” he cautioned.
The finance minister termed money laundering, round tripping, tax evasion and creation of shell companies as a serious offence as the money meant for eduction, healthcare, rural development is being taken away.
“Our target has to be to make sure India as it evolves from a developing to developed economy (also changes) from a tax non-compliant society to a highly-compliant society. Once that were to happen, I think the fear of the law and the fear of the consequences visiting us itself will ensure compliance takes place,” he said.
Jaitley referred to technological advances, saying technology has provided tools to detect violations, and provisions under the PMLA and the FEMA have rules of evidence that can help take cases to the logical conclusion.
“Once we are able to make an example of some of these offenders, I think others then will realise the benefits of compliance of law,” he added.
He hoped the ED will “strictly enforce the law in our endeavour to raise legitimate revenue which is in larger public interest which can only be achieved by ensuring voluntary compliances of people”.
Jaitley also called for introspection saying that as India evolves, the compliance level too should rise. “Legal compliances of taxation and currency laws have been a feature of the developed states.
If you go to the developed world, violations are rare, but those who violate are strictly called upon and answerable to the law. There are strict penal consequences,” he pointed out.
Despite being conventional in their societal attitude, Indians have never considered non-compliance with taxation and currency law as “morally improper” and instead it was considered as a “smart” act.
(With inputs from agencies)