Big Names Clarify on Panama Papers Leak

BENGALURU: A whopping 11 million tax documents of Mossack Fonseca leaked last week have disclosed that the Panama-based law firm aided over 500 Indians to set up offshore companies in tax havens around the world. The impact of the high-profile names that have surfaced in the leak is such that the Indian Prime Minister has stepped in with a demand for first reports on the Panama papers revelations in 15 days. From businessmen to celebrities, here are the responses of five of those named in the list, reports The Indian Express.

Kushal Pal Singh

Mossack Fonseca’s leaked documents revealed fund transfers amounting to $10 million by Kushal Pal Singh, Chairman and CEO of DLF Limited to buy shares in Willder Ltd, a firm registered in British Virgin Islands. The list reveals Singh, his wife, son, daughter and their family as shareholders in Willder Ltd.

In response Singh clarifies, “It is submitted that the permissible modus operandi of RBI for remittance of money under permissible Liberalised Remittance Scheme (LRS) limit each year allows a Resident Indian to firstly open a bank account in a foreign bank and thereafter remit the funds in it.” Singh adds that it is evident from the conduct of their foreign LRS bank accounts that the accumulated money was lying in the accounts for many years without being invested anywhere.

Singh says the subscription towards the shares of an existing foreign company was made from the accumulated bank balance existing in a foreign bank account (LRS Accounts) and the actual remittance from India never exceeded the permissible LRS limit. The investment made related to subscription of shares of an existing foreign corporate entity was not set up by them. Instead, this foreign corporate entity was set up by foreign nationals. No such action had ever been taken by them for setting up/ incorporation of a foreign corporate body. Singh adds that since shares were acquired under LRS, there is no reporting requirement for the entity under Foreign Exchange Management Act (FEMA). The details are mentioned in Schedule of Foreign Assets of our Income Tax returns every year since it is required under the Income-Tax Act, 1961 and rules made thereunder.

It is further clarified that the shares in the existing foreign entity have been subscribed by Singh and family from the funds held in their LRS accounts abroad and not from the remittances from India. It is certainly not a violation of any RBI’s/ FEMA regulations. All remittances and utilization of the funds are strictly in accordance with the rules and regulations of FEMA and Income-Tax Act.

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