Nirav Modi Current Affairs
The Central Board of Direct Taxes (CBDT) has constituted 5-member working group (committee) to examine taxation aspects related to High Net Worth Individuals (HNWIs) who are migrating abroad to other jurisdictions. The Working Group will be headed by Pragya Sahay Saksena, a joint secretary with Foreign Tax & Tax Research Division of CBDT.
The working group will make recommendations for policy decision in respect of tax risks of migrating HNWIs. It has also been empowered to coordinate with various divisions and directorates of CBDT to formulate India’s position for various aspects related to taxation of migrating HNWIs. The CBDT has termed such HNWIs as substantial tax risk as they may treat themselves as non-residents for taxation purposes in India.
In recent times, there have cases of HNWIs migrating from residence of their country to other jurisdictions. Such HNWIs pose substantial tax risk as they treat themselves as non-residents for taxation purposes in first jurisdiction even though have strong personal and economic ties with that jurisdiction.
The Working Group has been constituted for examining the taxation aspects of such HNWIs. Its announcement comes at the time when there are concerns over recent cases of HNWIs such as Vijay Mallya and Nirav Modi fleeing from country amid ongoing investigations against them.
According raw data analysis by Morgan Stanley Investment Management, In 2017 alone, 7,000 millionaires left India without paying taxes. It makes India top of the exodus charts of HNWIs causing huge loss the exchequer. The data shows that 2.1% of India’s rich left country compared with 1.3% for France and 1.1% for China.
Central Board of Direct Taxes (CBDT)
CBDT is nodal policy-making body of the Income Tax (IT) department under Finance Ministry. It is a statutory authority established under The Central Board of Revenue Act, 1963. It is supreme body in India for framing policies related to direct taxes. The composition of CBDT includes Chairman and six members.
The state-owned banks have started rationalising overseas operations by consolidating 35 operations and closing down non-viable branches as part of the clean and responsible banking initiative. The consolidation oncludes bank branches, remittance centres and representative offices.
It will be without affecting international presence of PSBs in these countries. Moreover, 69 operations also have been identified for further examination. It is part of government’s commitment to ‘clean and responsible banking and move towards cost efficiencies and synergies in overseas market.
The rationalisation of overseas operations of banks comes at the time when jewellery designer Nirav Modi had allegedly cheated Punjab National Bank (PNB) of Rs.12,700 crore in connivance with PNB staff and officials of overseas branches of other state-owned banks.
Presently, public sector banks have about 165 overseas branches, besides subsidiaries, joint ventures and representative offices. State Bank of India (SBI) has largest number of overseas branches (52) followed by Bank of Baroda (50) and Bank of India (29). The state-owned banks have largest number of branches in United Kingdom (32) followed by Hong Kong and UAE (13 each) and Singapore (12). As per the banking sector agenda approved at PSB Manthan in November 2017 public sector banks (PSBs) have to examine all 216 overseas operations.