Seeking equal treatment in investment and taxation between overseas and resident Indians, diversified conglomerate Hinduja Group today said amnesty must be given to bring back black money from foreign soil to India.
In a pre-budget memorandum to Finance Minister Pranab Mukherjee, Hinduja Group Chairman S P Hinduja said, "Overseas Indian investment and taxation (must) be at par with resident Indians in all respects."
Hinduja, who is also Chairman of IndusInd International Federation, said NRIs having their wealth in Overseas Corporate Bodies (OCB) should be allowed to invest in India.
"By lifting the ban on OCBs and simplifying the procedures for individual NRI investment, the market will be widened with more players," he said.
On the issue of black money, Hinduja said India should regularise foreign accounts on an ongoing basis to bring back the money allegedly stashed away in tax-heavens such as Switzerland, Mauritius and Liechtenstein.
"Any time the account holder wants to bring back the money to India, it can be given as free gift to his relatives...Amnesty is not a one time solution and we will have to introduce systems and procedures to regularise the accounts at the foreign centres on an ongoing basis," he said.
The Indian government is facing intense pressure from the opposition, as also the courts, to act tough against those who have amassed illicit wealth in foreign countries that have strict secrecy rules.
"The government may agree to convert the foreign holdings into Indian rupees and hold them in an unaccounted money account with the foreign government after recovering tax at the rate of 15-20 per cent," Hinduja said.
He put forward the example of nations like the US, which have reportedly brought back huge money into their native soil after the account holders had agreed to pay 15-20 per cent tax on outstanding amount.
"...there will be continuous regularisation of the accounts and flow of funds into India. No penalty may be levied or criminal action resorted to against the account holders except when the money had been acquired through fraudulent means," Hinduja added.
Earlier this month, the Indian government had told the Supreme Court in an affidavit that it is trying to bring back the money by taking various steps such as levying tax under the Direct Taxes Code Bill.
The government also said that it had completed negotiations for signing Tax Information Exchange Agreement (TIEA) with 10 countries, where the money is believed to have been stashed.
On the issue of corruption that has plagued India in the recent past, Hinduja said the government needs to address the issue as "recent corruption allegations have led to policy paralysis and impacted business confidence and FDI flows".
"This is a cancer, which must be addressed. Unstructured, non-institutional political funding is the root of corruption in India," he added.
Hinduja also said the government should allow overseas Indians to purchase land or take it on long-term lease for at least 10 years for agriculture, horticulture and plantation activities.
Economic reforms such as further opening up of retail and insurance businesses, land acquisition for infrastructure are pending and hence the FDI flows are losing momentum, he said.
"Opening of multi-brand retail sector will lead to establishment of backward and forward linkages to enhance the income of the farmers and rural artisans," he added.