The cabinet clearance for the Bill intended to punish those who keep unaccounted wealth in foreign countries is well-intentioned. However, good intentions alone do not guarantee success of any law. In the present case, the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015, is ruthless in its treatment of the violators of the law. For instance, the fine for any income concealed in this manner is 300 per cent of the amount. What’s more, they are also liable to be punished with 10 years’ imprisonment. Seen together, the law is harsh. It overlooks the fact that certainty of punishment, rather than its severity, is what deters crime. This is true about financial crime also.
There is no disputing the fact that a large sum of Indian money is stashed away in foreign banks. Though the names of some of those who have kept money in foreign banks have been disclosed, they constitute only a tip of the iceberg. It is also an emotional issue for Indians who feel that the money should have been in India and used for development. The ruling BJP made good use of it during the last Lok Sabha elections when it said that the money would be brought back to India and it would enrich every Indian by `15 lakh. It is against this backdrop that the new Bill, announced by finance minister Arun Jaitley in his Budget speech, should be seen.
True, there is a one-time amnesty. What is disconcerting is that the law gives government officials enormous power. That imprisonment can be invoked against the guilty is not something that can be approved of. A person or company doing business in foreign countries may accidentally breach the law. Similarly, banks and other financial institutions may also make mistakes which can be construed as violation of the law. The law does not spare them even. Instead of imprisonment, it would be better for the government to institute provisions for attachment of properties of the guilty. The idea is not to fill the jails but to ensure compliance with the law.