Govt to investigate more than 600 Indians with overseas bank accounts for tax evasion

NEW DELHI – India’s government handed over the names of more than 600 Indians with foreign bank accounts to the Supreme Court on Wednesday after public outrage over rampant tax evasion.

The court, which ordered the government to release the list, has given the names to an investigative team that the government set up in June to find the illegal funds that tax dodgers have parked overseas.

The court set a deadline of March 31 next year for the team to complete its probe and begin legal action against tax evaders.

Prime Minister Narendra Modi says he wants to prosecute tax dodgers and bring money stashed in tax havens back into the country but little progress has been made since his landslide election victory earlier this year.

Attorney General Mukul Rohatgi said 627 people are named on the list. They all had accounts with a Geneva branch of HSBC, information that was disclosed in 2011 by an employee of the bank and passed to India but not acted on by the previous government. They are likely a tiny fraction of Indians with foreign bank accounts.

The Central Bureau of Investigation, India’s equivalent of the FBI, said in 2012 that $500 billion was held by Indians in tax havens overseas. Funds are stashed in tax havens such as Liechtenstein, British Virgin Islands, Switzerland, Mauritius, Jersey and the Isle of Man.

India has a flourishing “black money” economy that functions parallel to the legal economy. Undeclared income is used to fund election campaigns and buy land or real estate in order to avoid paying property taxes.

On Monday, the government disclosed the names of seven people who it said had illegal accounts abroad. That led to widespread outrage, prompting the court to step in and order the government to reveal all the names that it had.

The government told the court that it was committed to disclosing the names of people holding money abroad illegally. In an affidavit, the government said that since every account held by an Indian in a foreign country may not be illegal, it would investigate the accounts before disclosing the names of account holders.

India’s anti-corruption crusader Arvind Kejriwal said the special investigative team should carry out its probe in a rigorous and timely manner and that government action against tax evaders must be uniform.

“Our information is that the government is acting in a selective manner by letting off some offenders, conducting raids on some, and asking others to pay taxes and penalties,” Kejriwal, the head of the Common Man Party, or Aam Aadmi, told reporters.

“This shouldn’t happen. Government should take strictest action against all tax offenders.”