Ministry of Finance

Finance Minister led the Indian delegation at G20 Finance Ministers and Central Bank Governors as well as the BRICS Finance Ministers and Central Bank Governors meetings on the side-lines of the IMF/World Bank Annual Meetings

FM re-emphasized the need for G20 to ensure collective action so as to enable global growth to regain pace

Finance Minister leading Indian delegation to the IMF/WB Annual Meetings being held in Washington D.C this week

Dated: 18 OCT 2019

Union Minister for Finance & Corporate Affairs , Smt. Nirmala Sitharaman, led the Indian delegation at G20 Finance Ministers and Central Bank Governors as well as the BRICS Finance Ministers and Central Bank Governors meetings held in Washington D.C yesterday. Finance Minister is leading the Indian delegation to the IMF/WB Annual Meetings being held in Washington D.C this week.

The focus of discussions in the G20 Finance Ministers and Central Bank Governors Meeting was on the current challenges to the global economy and possible responses to mitigate them. Smt Sitharaman emphasized that the G20 has the responsibility to navigate the global policy co-ordination in effective fashion by identifying and taking strong measures for building buffers and catalysing a second wave of reforms. She gave a clarion call for concerted action in the face of global slowdown. She also highlighted that the emerging market economies, in particular, face the challenge of achieving economic growth and inclusive development while pursuing sustainable financing. In this context, Finance Minister emphasized on the  importance of countries pursuing structural reform measures to counter the growth slowdown.  The structural reform measures undertaken by India was highlighted by the Finance Minister particularly, the recent measures such as reduction of Corporate tax. Smt. Sitharaman indicated that India has reduced the Corporate tax from 30% to 22% thereby making India one of the lowest corporate tax imposing countries in the world today. This will spur investment. Alongside the Corporate tax reform, Government of India’s measures pertaining to Aaadhar based Direct Benefit Transfer as well as Universal Health Care policy received special mention from the Finance Minister. In conclusion, FM re-emphasized the need for G20 to ensure collective action so as to enable global growth to regain pace.

The main issues discussed during the BRICS FMCBG meeting included those pertaining to New Development Bank (such as membership expansion and enhancing the effectiveness of the utilization of the NDB’s Project Preparation Facility); developing the way forward on IMF resources as well as formulating a consensus co-operation on Authorized Economic Operators Programme.

On NDB issues, the Finance Minister in her interventions, emphasized India’s strong support for NDB’s membership expansion and encouraged NDB Management to continue the good progress achieved on this issue till date. As far as improving the effectiveness of the Project Preparation Facility is concerned, the Finance Minister indicated that sustainable recovery mechanisms need to be inbuilt into the PPF guidelines so that the assistance extended is recovered once the project loan is sanctioned. Regarding the IMF resources issue, Smt. Sitharaman indicated India’s deep regret on the lack of progress of the 15th General Review of Quotas (15th GRQ). With reference to the alternative proposal emerging at the current juncture with reference to strengthening borrowed resources of IMF, Finance Minister expressed a word of caution and indicated that borrowed resources cannot provide full confidence in extreme crisis situations as creditor nations themselves may be in stress.

Prior to the G20 FMCBG, the G20 Finance and Central Bank Deputies also met to discuss the way forward on priority G20 agenda items such as Quality Infrastructure Investment, building effective country platforms, attaining debt sustainability as well as strengthening universal health care financing.  Secretary, Economic Affairs Shri Atanu Chakraborty as India’s G20 Finance Deputy led the Ministry of Finance delegation for this meeting.

On Quality Infrastructure Investment, Shri Chakraborty urged the G20 to explore innovative sources of financing for boosting infrastructure development ensuring that quality considerations are in-built into these financing sources. As far as debt sustainability is concerned, Secretary , Economic Affairs while agreeing the importance of the agenda, struck a word of caution that the agenda of debt sustainability and transparency in LICs should not undermine the internationally agreed commitment on official development assistance. He also expressed India’s keen interest in the work IMF is pursuing on collateralized debt and looked forward to the research from IMF on the area. On strengthening UHC financing, he emphasised that the discussions on UHC financing must adopt a holistic approach encompassing preventive, curative and palliative care as well as plurality of pathways for achieving UHC including through traditional and complementary systems of medicine. On building effective country platforms, Shri Chakraborty emphasized that the G20 should reflect further about who will build the platform, how the private sector will be engaged in the process and the contours and scope of the platform as to whether it will involve project preparation, knowledge sharing, technical assistance etc.

In other engagements, Union Finance Minister attended an Industry Roundtable organized by USIBC and CII as well as an Economist Roundtable organized by CII. She also held bilateral meetings with Chancellor of Exchequer United Kingdom, Mr. Sajid Javed; Secretary of State for Development of the United Kingdom, Rt. Hon. Alok Sharma; Finance Minister and Deputy Prime Minister of South Korea, Mr. Hong Nam Ki; President of the World Bank, Mr. David Malpass; Special Advisor to Japanese Finance Minister and Candidate for ADB, Mr. Masatsugu Asakawa; Governor of JBIC, Mr. Tadashi Maeda; and Global CEO of Standard Chartered, Mr. Bill Winters.

RM/KMN
(Release ID: 1588430)

Union Finance Minister, Smt Nirmala Sitharaman, has said that the global economic risks and imbalances reinforce the need to strengthen global co-operation at the multilateral level, besides governmental initiatives. She stated this in her intervention during International Monetary and Financial Committee (IMFC) Plenary Session yesterday in the ongoing Annual Meetings 2019 of the IMF and World Bank being held in Washington DC, USA. At the National level, a calibrated and balanced approach to deploying a mix of fiscal, monetary and structural measures by countries can help achieve their growth potential, the Finance Minister added.

Smt. Sitharaman further stated that International Monetary Fund (IMF) should provide solutions that are specific to important growth geographies to help alleviate the current conundrum. The Finance Minister also stated that the IMF should evolve a policy framework that would assess the vulnerability of economies to capital flows and that developing stronger surveillance mechanism with sharper diagnostic tools can mitigate or even prevent the adverse effects on fragile economies. On the 15th Round of the IMF’s General Review of the Quotas (15th GRQ) likely to conclude without a quota increase, the Finance Minister stated that work on the 16th Round should begin in right earnest and should have a tight timeframe.

The Finance Minister also attended International Monetary and Financial Committee (IMFC) Restricted Breakfast .

Smt. Sitharaman later participated in the 100th Meeting of the Development Committee Plenary. The items on the agenda included the World Development Report 2020: Trading for Development in Age of Global value Chains; Jobs and Economic Transformation (JET): Drivers, Policy Implications and WBG Support theme for IDA; Human Capital Project: An update; and IDA Voting Rights Review: Report to Governors. In her intervention at this session, the Finance Minister mentioned that as we draw closer to SDG 2030, India is pursuing both scale and speed of development, through large National missions in a fiscally responsible, sustainable and inclusive manner. These programs range widely from solar energy to direct benefit transfer, from skilling to sanitation. But there is a common approach: to improve incomes, reduce deprivation and enhance living standards. Smt. Sitharaman also stated that in pursuing investment led growth, we should not neglect sustainability, efficiency and transparency in debt and tax policies. Moreover, investments must generate domestic revenues that can be channelized into effective public spending in health, education and skilling so that youth can benefit from the economic growth. The Finance Minister encouraged IMF to guide concerted international action to combat illegal financial flows and welcomed collaboration to push investment to augment MDB financing into developing countries.

She concluded her engagements with a press conference where she talked about the highlights of this visit. 

The Finance Minister is currently on an official tour to Washington DC to attend the Annual Meetings of the International Monetary Fund and the World Bank and other associated meetings. She is accompanied by Mr. Shaktikanta Das, Governor, RBI; Secretary Economic Affairs, Shri Atanu Chakraborty; and other officials.

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RM/KMN
(Release ID: 1588535)

Ministry of Finance

Income Tax Department conducts Search on a “wellness group” in Chennai

Dated: 18^th OCT 2019

On 16.10.2019, the Income Tax Department conducted search action under the Income-tax Act, 1961 in the case of a conglomerate of trusts and companies that run year-round “wellness courses” and training programmes in philosophy, spirituality, etc at various sprawling residential campuses in Varadaiahpalem in Andhra Pradesh (AP), and also in Chennai and Bengaluru.

The group which was founded by a spiritual guru in the 1980s with “oneness” philosophy has also diversified into several sectors including real estate, construction, sports, etc in India and abroad. The group is presently managed and controlled by the spiritual leader who laid the foundation of the group, and his son. The courses attract residential customers from abroad and the group earns substantial receipts in foreign exchange. There was intelligence that the group has been suppressing its receipts which are ploughed into investment in huge tracts of landed property in AP and Tamil Nadu (TN) and also in investments abroad. The search action which is still in progress has covered about 40 premises located in Chennai, Hyderabad, Bengaluru and Varadaiahpalem.

During the search proceedings, evidence has been found that the group has been regularly suppressing its receipts at its various centres or ashrams. Evidence has been found with key employees who maintained record of cash collections that were kept outside the accounts for use in making investments elsewhere and also for paying for properties over and above documented values. It is learnt that the group also earned unaccounted income in receiving cash from property sales over and above documented values. A preliminary estimate of such unaccounted cash receipts is Rs 409 crore from FY 2014-15 onwards. Such unaccounted cash receipts are also evidenced by huge quantities of cash and other valuables found at the residences of the founder and his son, and at one of the campuses. A total sum of cash of Rs 43.9 crore has been found and seized by the Department at these premises.

Apart from the above, substantial sums of foreign currencies have also been found and seized. The total of such foreign exchange found at these premises is about $2.5 million which amounts to approximately Rs 18 crore. Foreign exchange in other currencies has also been found and seized. Substantial quantities of undisclosed gold in the form of jewellery, about 88 kg approximately valued at over Rs 26 crore, has also been found and seized. Undisclosed diamonds amounting to 1,271 carats valued approximately at about Rs 5 crore were also found and seized. Total value of seizure so far is approximately Rs 93 crore. The undisclosed income of the group detected so far is estimated at more than Rs 500 crore. The search proceedings are still in progress.

An important finding of the search is that the group has been investing in a number of companies in India and abroad, including in tax havens. Some of these companies based in China, USA, Singapore, UAE, etc are found to be receiving payments from foreign clients who attend the various residential “wellness” courses offered in India. The Department is investigating into diversion of income taxable in India to offshore entities by the group in this process. Further, it is found that one of the group trusts may be providing accommodation entries for other parties by receiving donations from them and then returning the money back under the garb of expenses and receiving a small percentage as fee. Instances have also been found where the group is not accounting for money received from foreign clients in cash in foreign currency and then exchanging the same in the grey market. All these leads are being pursued and investigation is in progress.

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RM/KMN

(Release ID: 1588457)

Ministry of Finance

Income Tax Department conducts searches on business group in Goa

Dated: 12 OCT 2019

The Income Tax Department carried out search operation on 10th October 2019 covering six premises of two groups involved in the sale-purchase of hotel resort at Goa.

One of the groups covered currently owns a large property at Goa on which a 5 star resort project is being built. The group is engaged primarily in hotels & hospitality, real estate and construction. The buyer, a Delhi Based group of companies is into catering, restaurant and hotel business.

Search operations have been concluded. The search resulted in  seizure of undisclosed  assets of Rs 4.39 crore comprising undisclosed cash of Rs 2.55 crore and jewellery/valuables worth Rs 1.84 crore.The group made a disclosure of a total amount of Rs 124.41 crore representing undisclosed income and also committed to pay taxes immediately.

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RM/KMN

(Release ID: 1587948)

Ministry of Finance

Income Tax Department conducts searches on coaching institutes in Namakkal, Tamil Nadu

Dated: 12 OCT 2019

The Income Tax Department, conducted a search action on 11th October, 2019 in the case of a business group based in Namakkal, Tamil Nadu. The group is mainly into running of educational institutions, and coaching institutes for competitive exams like NEET, etc. The group comprises several partnership firms and a trust controlled by a closely knit group of individuals. The search action covered 17 premises including residential premises of the group's promoters. The premises are located in Namakkal, Perundurai, Karur and Chennai in Tamil Nadu.

The search was undertaken on the basis of intelligence that the group was indulging in substantial tax evasion by suppression of fee receipts received from students. The modus operandi was to receive part of the fees in cash and such cash receipts were invariably not entered in the regular books of accounts. Instead, such receipts were maintained in separate set of accounts. Incriminating evidence of such suppression of receipts has been found during the search in the form of accounts maintained in diaries, in electronic storage devices and also in the form of huge sums of unaccounted cash. It was found that cash was kept in lockers in banks in the names of employees who acted as benami or name lenders.

Significant amount of cash was found in a safe inside an auditorium in the main school premises. Unaccounted cash of about Rs 30 crore has been found and seized. The unaccounted receipts are deployed for acquiring immovable properties as personal investments which are then leased for long term to the trust for expanding to other towns. It was also found that highly priced faculty are hired and employed in the coaching institutes and they are paid outside the books. Based on preliminary findings, the undisclosed income of the group is estimated at more than Rs 150 crore. The search is still in progress.

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RM/KMN

(Release ID: 1587925)