Black money: SIT calls for curbs on betting in cricket, check on donations to religious bodies

Friday, 24 July,New Delhi: To check the black money menace, the Supreme Court-appointed SIT today called for effective norms to curb betting in cricket and a stronger set of norms for P-Notes, while also making a case for bringing donations to educational and religious bodies under tax net.

The special investigation team (SIT) on black money also said Sebi should come up with regulations on collection beneficial ownership details of P-note holders, as also for monitoring any unusual rise in stock prices.

The SIT also flagged serious concerns over huge amounts of black money being used and generated in areas like betting as also in donations to schools, colleges and religious institutions.

In its third report, the panel flagged the issue of “involvement” of huge illegal and unaccounted money in cricket betting, especially Indian Premier League (IPL) and made a case for effective legislative steps to deal with the menace.

“…it is apparent that illegal activity of cricket betting requires to be controlled by some provisions which are deterrent to all the concerned,” said the report of SIT headed by Justice MB Shah (retd).

On misuse of capital markets to launder black money, the panel said Sebi should put in place an effective mechanism to monitor any unusual rise in stock prices and inform other agencies like CBDT and Financial Intelligence Unit (FIU) for necessary action.

Sebi recently barred hundreds of entities, including individuals and companies from the securities market for suspected tax evasion and laundering of black money through stock market platforms.

The SIT also suggested that the market regulator should find out beneficial ownership of Participatory Notes (PN), an instrument used by foreign investors to invest in India.

“It is clear that obtaining information on ‘beneficial ownership’ of P-notes is of crucial importance to prevent their misuse. Sebi needs to examine the issue… and come up with regulations where the ‘final beneficial owner’ of P notes/ODIs are known,” the report said.

It said that about Rs 85,000 crore came in through P-from Cayman Island, which has a total population of about 54,000 (in 2010). “…it does not appear possible for the final beneficial owner of ODIs originating from Cayman Islands,” it said.

On generation of black money in education sector and through donations to religious institutions and charities, it said CBDT should take expeditiously finalise assessments, and if necessary, take punitive action.