Budget opens door for whitening black money again

Staff Correspondent

14 June, 2019 12:00 AM printer

To draw more investment in Economic Zones (EZ) and High-Tech Parks, the government once again offered scope for whitening black money by paying 10 percent income tax.

The finance minister made the offer while addressing the budget speech at the parliament on Thursday.

He said the investors will not face any questions about the sources of their income if they invest in EZ and High-Tech Parks by paying a tax of only 10 percent on the amount.

“I propose a new provision in the income tax law to accept investment in Economic Zones and High-Tech Parks. No question will be asked about the sources of invested fund if the investors pay 10 percent on their amount of investment,” the finance minister said in his speech. 

The opportunity to legalise black money in the industrial sector was first given in the Fiscal Year of 2003-2004, but the facility was withdrawn two years amid criticism from various quarters.

In FY’06-07, the caretaker government offered the scope for legalising black money by paying a penalty.

Now the government considers re-introducing the facility in a bid to encourage private investment hovering between 22% and 23.40% of GDP in the last several years.

At present, the Income Tax department does not raise any question about the sources of fund invested in purchase or construction of any apartment or flat, and building if tax is paid at certain rates on such investments.

Taxpayers are not availing themselves of this opportunity due to the higher tax rates, said the minister. 

“I propose to decrease existing tax rates to encourage the taxpayers for voluntary disclosure  of  purchase  or  construction  of  any apartment  or  flat,  and  building  in  their  tax  returns.”

“I  hope  that  taxpayers will  avail  this  opportunity  and  voluntarily  reveal  their  undisclosed investment  on  purchase  or  construction of  apartment  or  flat,  and  building in their tax files to include them into the tax net,” the minister added.