India’s fight against black money hidden abroad faces a significant hurdle: a massive gap between tax demands and actual recovery. While the government has raised over ₹35,105 crore in tax and penalties under the Black Money Act of 2015, a mere ₹338 crore has been recovered as of March 31, 2025.
The Enforcement Landscape
Since its inception in July 2015, the Black Money Act has seen 1,021 assessments completed, leading to 163 prosecution complaints. However, the bulk of the unrecovered funds remains tied up in lengthy legal battles, with appeals pending across various levels of the judiciary, including the Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal (ITAT), High Courts, and the Supreme Court.
Debunking Swiss Bank Myths
Recent reports of a surge in Indian-linked funds in Swiss banks (to about ₹37,600 crore in 2024) sparked concern. However, the Finance Ministry clarified that these figures from the Swiss National Bank (SNB) do not solely represent black money. They encompass a broad range of financial flows, including inter-bank positions and deposits in foreign branches of Swiss banks, and should not be used to gauge illicit funds held by Indian residents.
The Power of Information Exchange
A crucial tool in India’s arsenal is the Automatic Exchange of Information (AEOI) framework. Since 2018, Switzerland has been sharing detailed financial information about Indian residents with Indian authorities, with the first exchange occurring in 2019 and continuing annually. India also receives similar data from over 100 other foreign jurisdictions. This robust information sharing allows authorities to detect tax evasion and take appropriate action under direct tax laws.
A Look Back: The 2015 Compliance Window
In 2015, the government offered a one-time compliance window under the Black Money Act. This initiative saw 684 disclosures of undisclosed foreign assets totaling ₹4,164 crore, resulting in the collection of ₹2,476 crore in taxes and penalties.
The Road Ahead
Despite strong legislative intent and international cooperation through AEOI, the significant disparity between demands and recoveries highlights the inherent complexities of tracking and repatriating hidden wealth. The journey from identifying illicit funds to their actual recovery remains a challenging and often protracted process.