A media report suggests that 500 Indians featured in the Panama Papers leak having offshore accounts are said to be in accordance with Reserve Bank of India (RBI) rules.
The report quoted a source in the government saying that a large majority (about 90 per cent) of the accounts have used RBI’s liberalised remittance scheme (LRS).
An investigation by the International Consortium of Investigative Journalists (ICIJ) and its media partners revealed a set of documents which showed law firm Mossack Fonseca helped clients, including prime ministers, parliamentarians, criminals and movie actors, launder money, dodge sanctions and evade tax with offshore accounts.
Former Miss World and actress Aishwarya Rai, her father-in-law Amitabh Bachchan, businessman KP Singh of the DLF group, Sameer Gehlaut of the Indiabulls group, and Vinod Adani of the Adani group are among the 500 Indians linked to offshore firms set up in tax havens such as British Virgin Islands and the Bahamas.
An Indian resident is allowed to open a foreign bank account under the LRS for undertaking current or capital account transactions. They can remit money from India – only up to a specified limit within a financial year – as prescribed under the Foreign Exchange Management Act (Fema) of 1999. The limit is $2,50,000 (Rs 1.63 crore).
Further, once the bank account is opened, credit to such an account has to be from the resident’s Indian account through normal banking channels.
Using LRS, about $1.3 billion were transferred out of India in FY15 for things like purchase of property, investment in equity and debt, donation and gifts.
The undisclosed accounts will face action under the black money law which was introduced last year.