The debate over allowing or disallowing of whitening of undisclosed sums of money is a strong one. The proposed provision for legalising moneys that is off the books envisages a payment of a flat penalty @10 percent. This facility of making black money white is likely to take effect in the next fiscal despite strong reservations of the various bodies representing the business community. The reasons for such opposition are obvious.
On the one hand the government is pressing ahead with widening the tax net and encouraging people and commercial entities to pay what is due to deepen the State's coffers; simultaneously it is extending the scope for legalising income generated illegally. The latest move is bound to send mixed signals to those who remain outside the tax brackets for it smells of double standards. Furthermore, how exactly does the government intend to legalise ill-gotten money when it is signatory to international anti-money laundering statutes remains to be seen. The fact that such undisclosed sums are commonly associated with corruption, crime or other illegal activities is not lost on anyone. More importantly, granting of such facility year after year encourages, even the otherwise honest tax payer to reconsider paying taxes. When one may 'whiten' one's money at a flat rate of 10 percent as opposed to the multi-layered tax slabs that exist under the tax laws, does it not make more sense to go with the latter?
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