Patiala, October 5
Retired civil servant and former Principal Secretary (Finance) K.B.S. Sidhu has suggested three administrative measures to the Union Government to improve the recovery of undisclosed foreign assets and tax dues, ahead of the Union Budget 2027-28.
In a letter addressed to Union Finance and Corporate Affairs Minister Nirmala Sitharaman, Sidhu said the government had already created the necessary framework over the past decade to identify undisclosed foreign assets. The focus should now shift from detection to actual recovery and repatriation of assets and revenue.
He pointed to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, the FATCA agreement with the United States, automatic exchange of financial account information under the Common Reporting Standard (CRS) since 2017, and the receipt of Swiss account information since 2019.
watch…..ਭਾਈ ਵੀਰ ਸਿੰਘ ਨੂੰ ਸਮਰਪਿਤ ਸਮਾਗਮ : ਦੇਸ਼ ਭਰ ਦੇ ਕਵੀਆਂ ਨੇ ਦੇਹਰਾਦੂਨ ਵਿੱਚ ਪੰਜਾਬੀ ਸਾਹਿਤ ਦੀ ਮਹਿਕ ਫੈਲਾਈ
According to Sidhu, these mechanisms have significantly improved the government’s ability to identify undisclosed foreign assets. However, recovery remains a major challenge.
Citing replies given by the government in Parliament, Sidhu said that by March 31, 2025, tax demands amounting to ₹35,104 crore had been raised under the Black Money Act, while only around ₹338 crore had been recovered.
He also referred to Enforcement Directorate actions under the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA), noting that while the amounts attached and restituted were substantial, there was no separate publicly available figure for foreign assets actually repatriated to India.
Three Key Suggestions
1. Set up a Joint Foreign Assets Recovery Cell
Sidhu proposed creating a dedicated recovery cell comprising officials from the Central Board of Direct Taxes (CBDT), Enforcement Directorate (ED) and Financial Intelligence Unit-India (FIU-IND). The unit could be supported by forensic accountants and assigned specific officers responsible for high-value cases from detection through recovery.
He suggested that information collected under one law could be used to facilitate recovery under another, subject to the safeguards provided under the respective laws.
2. Introduce Recovery-Based Reporting to Parliament
He recommended that the CBDT and ED submit an annual statement to Parliament detailing the amount of money actually recovered and foreign assets actually repatriated.
The statement could also include tax demands raised and assets attached, allowing the government and Parliament to measure success based on actual recovery rather than merely the detection or attachment of assets.
3. Launch a Pilot for Treaty-Based Recovery Abroad
Sidhu suggested launching a pilot project with two or three jurisdictions where Indian-linked assets are believed to be concentrated.
India has ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, while several tax treaties also provide mechanisms for assistance in tax collection. According to Sidhu, these instruments have so far been used mainly for information exchange and could now be tested for actual recovery of Indian tax demands abroad.
No New Legislation Required
Sidhu said none of the three measures would require new legislation and that the first two could be announced in the Budget 2027-28 speech.
He also cited international examples, including China’s recent administrative approach towards offshore assets, while stressing that India need not adopt coercive measures. The key lesson, he said, was that information already available with the government would generate revenue only when dedicated teams were made responsible for converting that information into actual recoveries.
Key Figures Cited in the Letter
According to the figures annexed with the letter:
- Black Money Act compliance window (2015): 648 declarations involving ₹4,164 crore in assets; around ₹2,476 crore collected as tax and penalty.
- Black Money Act (July 2015–March 2025): ₹35,104 crore in demands raised; around ₹338 crore recovered.
- Panama and Paradise Papers: ₹20,353 crore in undisclosed credits detected by October 2021; 930 India-linked entities identified and ₹153.88 crore collected as tax.
- HSBC Geneva cases: More than ₹8,468 crore of undisclosed income brought to tax.
- FEMA, up to March 31, 2022: Around ₹8,130 crore in penalties imposed and ₹7,080 crore in assets seized.
- ED, 2025-26: ₹81,422 crore in attachments, ₹63,142 crore in restitution and ₹2,178 crore confiscated under the Fugitive Economic Offenders Act, 2018.
