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Foreign Asset Investigation Units: IRS Cadre will face a demand surge

By Rakesh Ranjan & M K Shukla- 14 Jan 2021


New Delhi (14.01.2021): The CBDT is laying the organizational structure to deal with the problem of unaccounted assets parked in offshore financial entities as disclosed in Panama Papers and other leaks. For this purpose, it has begun constituting Foreign Asset Investigation Units (FAIUs) in all the 14 investigation directorates located in various parts of the country. 

About 70 existing posts of IT investigators are said to have been transferred to FAIUs to kickstart their operation. But more officers will be needed all along the chain, thus fueling a surge in demand for IRS officers.

The Board has already asked the government for the allocation of more resources to facilitate the functioning of the new units. That may be provided in the FY22 budget which is being formulated and processed now.

The FAIUs are slated to function under the unified command of an officer in the rank of director-general of income tax. Depending on how they are cobbled up and grouped, they, perforce, will have to have directors, additional directors, and a large number of other supporting staff to do their mandated job in a sophisticated and efficient way.

To avoid attracting the charge of excesses and underhand dealings, the FAIUs will be directly monitored by the CBDT. How this will be done is not yet clear.

The pursuit of data analysis and initiating credible actions on the basis of these analyses would be the major function of the FAIUs. To do this, the FAIUs may need the expert assistance of data analysts and certified chartered accountants. So at some stage, possibly from the beginning itself, the CBDT may have to hire the services of outside experts, if they are not available in-house.

The new units will also probe cases of Indian entities named in global tax document leaks like the Panama Papers.

It is pointed out that a hell of a lot of data is now pouring into the tax department because of the major treaties signed by the country with a host of nations - like Double Taxation Avoidance Agreements (DTAAs), Tax Information Exchange Agreements (TIEAs), and the most recent Foreign Account Tax Compliance Act (FATCA) with the USA.

The processing of all these data, particularly those relating to such financial products as insurance, mutual funds, equities, will be a complex and complicated task requiring expert assistance to decipher whether the assets under scan are genuine or laundered ones.

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