Panama Papers: Why probe by Indian agencies may yield nothing

Black money is back in focus with the expose by the International Consortium of Investigative Journalists that shows  hundreds of Indians were shareholders and/or directors in companies incorporated in distant islands by Panama-based firm Mossack Fonseca in a bid to avoid tax.

Soon after the revelation, the government declared that action will be taken against said accounts held abroad by Indians and constituted a multi-agency group to continuously monitor information. Panama papers have named 500 people, including film actors and industrialists who have allegedly stashed money in offshore entities.

The assurances given by the BJP-led government to bring back black money in India has largely being ineffective. Possible reasons would be polices that have been established to curb accrual of black money have not been enforced by the agencies or existing legal and administrative framework which has its own limitations.

Is it so easy to float a company abroad? Would they able to get evidences against the said entities named in Panama Papers? What are the limitations, Business Standard explores.

Is it so easy to float a company abroad?

Some countries are following the disclosure norms reluctantly, while in some jurisdictions, the KYC norms are more liberal than others. According to the Reserve Bank of India (RBI) norms, liberalized remittances scheme (LRS) allowed individuals even minors to remit amount up to $250,000 ( Rs 1.65 crore as on date) each year abroad under self declaration. This is for studies, medical treatment, buying property overseas or holding shares in an overseas company or a combination of both.

Will they get evidences against entities named in Panama papers?

Getting information from other countries is a cumbersome task. There are limited options before Indian authorities which includes Letter Rogatory (LR), a formal request from a court to a foreign court for some type of judicial assistance. The most common remedies sought by LR are service of process and taking of evidence.Read More.