Majority of Indians named in Panama Papers Leaks may have used a legal route to have offshore assets

Amid the entire hullabaloo about the Panama Papers Leaks, it has turned out that many of the Indians, who have been named in the massive leaks for off-shoring their money to tax havens, used RBI’s Liberalised Remittance Scheme (LRS).

Under LRS, which was introduced in 2004 with a cap of $25,000 and was raised to $2,50,000, remittances up to that amount are allowed by a resident individual in one financial year. It was only last year that a law was introduced on undisclosed accounts that will face action under the black money law.

The LRS also allows buying immovable property, investment in equity and debt, and donations and gifts. As per an ET report, about $1.3 billion was transferred out of the country in FY15 through LRS.

More than 500 Indians have been named in the Panama Papers Leaks, including celebrities and politicos. As per preliminary enquiry, 90 per cent of Indians chose LRS route.

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"About 90% of these accounts have used RBI's liberalised remittance scheme (LRS) but the rest should be prepared to face the music," a government official told ET.

However, the government has said that the wrongdoers will be brought to books as tax authorities will seek information from other jurisdictions listed in the Panama Papers with which India exchanges information as part of bilateral or global treaties.

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Black money became a major political plank also when the Bharatiya Janata Party (BJP) claimed to bring the money back in India.
In his Budget 2016, Finance Minister Arun Jaitley announced a compliance window, giving a chance to come clean on black money.

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