India finds 1.8 million suspect transactions in tax amnesty

10th February 2017

Back in October last year, India announced a tax amnesty designed to clampdown on fraud and reclaim billions lost to evasion. At the time, reports suggested that the action was an ‘unqualified success’ at tackling the long standing and robust underground economy which sees huge sums avoid taxation partly because of India’s heavy reliance on cash transactions.

And if the latest news is to be believed, this amnesty has now identified a possible 1.8 million cases of potential tax evasion. This comes following a sudden ban on high-value bank notes in order to allow greater scrutiny of suspicious cash deposits.

A tax amnesty for the history books

Towards the end of last year, the Prime Minister removed all 500 and 1,000 rupee notes from circulation – effectively voiding 86 per cent of the currency distributed across the country. The government also put temporary restrictions in place for the amount of money that can be exchanged or withdrawn in one transaction.

In a country where 90 per cent of transactions are completed in cash, these motions understandably resulted in long queues at banks and anger from many citizens. However, perhaps more importantly, it also saw suspect activity flagged on 1.8 million accounts, which have now been singled out for further investigations. This move looks set to further support the Prime Ministers call for citizens to switch to non-cash payments methods, allowing the government to monitor any potential tax evasion easier.

This is arguably one of the biggest anti-tax evasion actions in history and certainly sets an example for authorities across the globe. For agencies placing talent in India, ensuring they’re fully compliant with the country’s tax regulations is now much more important if you want to avoid joining the lengthy list of those accused of tax evasion.

Compliance is a global issue

But the need to remain compliant is not restricted to one country alone – indeed it’s becoming increasingly common to see international authorities implementing new schemes in order to halt fraudulent activity. The world of tax across borders is complex, though, so in order to play it safe and avoid hefty fines or even criminal charges it’s highly advisable to seek expert help.

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