Money laundering to become difficult in next 1-2 years: Jaitley

Finance minister Arun Jaitley on Monday said tax evasion and money laundering will become “extremely difficult” in the next 1-2 years, with the global automatic exchange of information system coming into effect on a real-time basis.

Finance minister Arun Jaitley on Monday said tax evasion and money laundering will become “extremely difficult” in the next 1-2 years, with the global automatic exchange of information system coming into effect on a real-time basis.

Finance minister Arun Jaitley(HT File Photo)

“I am quite certain that the activity is going on in that direction and the next 1-2 years are also going to bring significant results because with almost real-time exchange of information, lives are going to become extremely difficult as far as lawbreakers in that regard are concerned,” Jaitley said while inaugurating the international conference on ‘Networking the Networks’.

Parking of illegal money anywhere in the world is increasingly becoming difficult as “the world is moving towards a situation where you can’t shift the profits that you earn in one jurisdiction and erode the capital base of that jurisdiction itself,” he added.

At the G20 nations’ Australia summit last November, leaders endorsed a new global standard by which more than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard, by 2017-18. India is one of the early adopters of the new standard.

The three-day conference will also see policymakers debate on setting up a South Asian Regional Intelligence Coordination Centre, in order to further strengthen global cooperation with regard to money laundering and tax evasion. It will have seven member countries — India, Nepal, Bhutan, Myanmar, Bangladesh, Sri Lanka and Maldives, revenue secretary Hasmukh Adhia said.

Clearing the air over the much-awaited reduction in corporate taxes from 30% to 25% over four years announced by Jaitley in last year’s budget, Adhia said the government will soon unveil a road map, which could be as early as next month. The draft proposal will be put in public domain for stakeholders’ comments, and unveiled in the upcoming budget.

The finance ministry is separately preparing a proposal to deal with the problem of large number of tax litigation, he added. “The road map for phasing out of exemptions will be unveiled soon... It should come out (by the end of this calender year).”

The justice RV Easwar-headed committee, announced recently, will deal with ways to simplify income tax laws, and is “preparing a roadmap separately for dealing with existing tax litigation,” Adhia said.

Replying to a question on whether the government is open to the idea of an out-of-court settlement with Vodafone in the Rs 20,000-crore tax dispute, Adhia said: “They had invoked arbitration and we have responded to it. And if there is offer for out-of-court, the government will consider it.” The case relates to Vodafone’s acquisition of Hutchison Whampoa’s stake in Hutchison Essar in 2007.

The government is pursuing a Rs 10,246-crore tax row with Cairn Energy, which is also in arbitration.

In a Facebook post last month, Jaitley had said that the government should put old tax cases to rest.