Window into the hidden world of Offshore Finances: Pandora

However, the Indian Trusts Act, 1882, gives legal basis to the concept of offshore trusts. Infact, under the Liberalised Remittance Scheme, all resident individuals, including minors are allowed to freely remit upto $2,50,000 per financial year for any permissible current or capital account transaction. Now this statement may just put the concept of Pandora Papers invalid for Indians, right?
The catch lies in the fact that there are different kinds of trusts, which are formed for serving different purposes. It can be summarized in the following manner:

Of these, 1st is considered to be absolutely legal, whereas regulators frown on the mention of the 2nd one. But, the most clandestine of all are the 3rd and the 4th kinds of trusts, which is regarded as completely illegal and thus, sued by the tax department. 
Pandora Papers exuded the illicit activities of hundreds, mostly from the 3rd and the 4th types of trusts and a few from the 2nd category, which amounted to almost 29,000 off-the-shelf companies and private trusts in the Tax Havens. This is how the so-called Shadow Economies, i.e., the Tax Havens form the spine of the whole conundrum.
The Indian nationals did not remain undisclosed in these papers. With around 300 Indians being exposed, most famous Indian names mentioned here were that of the cricket icon Sachin Tendulkar and Anil Ambani, the beleaguered brother of India’s richest person. Along with them, Nirav Modi was a potential suspect, whose name too was flashed in the records. Let’s learn about them individually.
Sachin Tendulkar is said to have started a company named Saas International Limited, which was liquidated in just 3 months, after the Panama Papers’ release in 2016. Although stated to be ‘legitimate’ and ‘declared to the tax authorities’, his liquidation earnings of $8.6 million is reckoned to be faulty, thus making an entry on the Pandora Papers.
This can be sighted as an example of the ‘Trust for Money earned Abroad’ (2nd category), whereas we can explore the appearance of Nirav Modi and Anil Ambani in the Pandora Papers as a specimen of the 3rd category. It has been said that a trust was established in the British Virgin Islands a month before he departed the country in 2018, thus giving rise to a $2 billion money laundering lawsuit against Nirav Modi. On the other hand, we have the notorious brother Anil Ambani, who is accused of setting up 18 offshore companies that borrowed and invested $1.3 billion, while declaring bankruptcy in the UK court. 
300 others similar to the above mentioned cases have been reported via the largest investigation in journalism history.
Now the task lies in the hands of the Tax Departments of various countries, who are ought to make several buckets like mentioned above and segregate all the exposed names to find out their real intent: tax planning or tax avoidance. While this activity is still ongoing, the Enforcement Directorate is expected to allege the people at fault by the application of Black Money Act or Prevention of Money Laundering Act. 

Conclusion

The amount of Black Money in India in comparison to the GDP is on a rise in recent years. When the tax slab rate in India used to be 97.5% in 1971, the Black Economy was 7% of the GDP. However, now the tax slab is 30% but the Black Economy increased to around 62% of the GDP. This hereby shows that even with a substantial reduction in the Tax Slab Rates, there has been a sharp rise in the Black Economy of India.
The Government has been taking several measures so as to avoid tax evasion by the super-rich of the country time and again but it did not reap such positive results. For example, Former Finance Minister Late Arun Jaitley got away with the Wealth Tax of 1% and imposed an increased surcharge of 12% on the super-rich of the country. After the Panama papers leak, the Indian Government had signed information exchange agreements with various countries but these agreements existed only on paper. Thus, India still continues to struggle in tackling the black economy problem and if not tackled anytime soon then it can be a major hindrance in achieving its economic goals.