Indian agencies set to seize assets of economic offenders

Indian agencies set to seize assets of economic offenders
The Indian government is to introduce a new law which will enable investigating agencies to seize domestic assets of those who have defaulted in repaying loans or who are economic offenders and have fled the country.

dubai - At present, authorities can provisionally attach assets only for 180 days



By H.P. Ranina

Published: Sun 19 Feb 2017, 6:40 PM

Last updated: Sun 19 Feb 2017, 8:42 PM

Q: There are some high-profile businessmen who have left India after having borrowed substantial monies from Indian banks and committed economic offences. The Indian government has not succeeded in bringing them back to India. Are other steps being taken against them?
- K. Varghese, Dubai

A: The government is to introduce a new law which will enable investigating agencies to seize domestic assets of those who have defaulted in repaying loans or who are economic offenders and have fled the country. The investigating agencies will have to inform the competent court after the assets are seized and seek further directions from the court in respect of such assets. At present, authorities can provisionally attach assets only for 180 days.

The Finance Minister said in his budget speech on February 1, 2017 that the government is considering introduction of legislative changes to the existing laws or enacting a new law to replace the existing ones. The new statute will provide for confiscation of the assets of persons who have absconded, unless they submit to the jurisdiction of the appropriate authority.

The government is also contemplating fixing a timeframe for offenders to appear before the investigating agencies. All authorities, including banks, have been asked to furnish a list of offenders who have refused to appear before the competent authorities and have fled the country. The confiscation of assets will be limited to individuals who have taken loans or guaranteed loans given to others or are responsible for diversion of funds.

Q: The government's expenditure sometimes results in leakages. I have been told that the government is putting in place a mechanism which would ensure that its spending is on a transparent basis. The President of India also made reference to this in Parliament. I would like to have some details.
- T. Ismail, Doha
A: The government has set up its own e-market platform. This will enable it to purchase and procure goods and services through registered dealers and service providers. The Government e-Market (GeM) is likely to be made mandatory for all departments. This will be done by amending the General Financial Rules which cover all government spending.

So far, the value of the transactions using the GeM has crossed Rs1.5 billion. Every year, the government spends around Rs2 lakh crore for procurement of goods and services. Once the GeM becomes mandatory, there is likely to be a saving of at least 10 per cent in government expenditure. By aggregating the value of purchases, the government will be able to get a better deal by reducing the price. The government's experience has been that the fall in prices is more pronounced through the use of bid and reverse auctions.

Q: Why is farm income not being taxed? It appears that there are many Indians living in rural areas who have a lavish lifestyle and do not pay tax on the ground that they earn agricultural income.
- T.K. Pandey, Doha
A: Agricultural income can only be taxed by state governments and not by the central government. This is the mandate of the Indian Constitution. However, agricultural income is earned only if certain activities are carried out, such as tilling soil, sowing seeds and harvesting produce. No other income can be classified as agricultural income. Therefore, the central government is free to tax all non-agricultural income of persons residing in rural areas. Many persons make bogus claims that they have earned farm income when in fact they have not. Therefore, the tax department is tracking cases where there is a suspicion that non-agricultural income is camouflaged as agricultural income.

The proposal to ban all cash transactions beyond Rs300,000 will help the government to track high-value deals where agricultural produce is sold in 'mandis'. Therefore, payments involving transactions of more than Rs300,000 even for agricultural produce will have to be through the banking system. A penalty of 100 per cent is imposed where transactions of more than Rs300,000 are undertaken in cash.

The writer is a practising lawyer specialising in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper's policies.


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