Hawala Times

These are taxing times. Ever since I joined National Academy of Direct Taxes, it has been so. I am the kind of person who believes in peace maro. So this study-training-attachment schedule of last 7-8 months did not go down well with me. Biggest of all problems was that I have scant interest in finance. On top of that I was training in income tax, one of the most challenging streams of applied finance.

But now the case is different. Its different because now I am getting a real feel of the job I am going to do. All this happened when I started working on my NALSAR Law project. As per a tie-up between NALSAR and NADT, we have to submit a project to the university to get a Masters degree in Taxation and Business Law -which supposedly is a sought after course. Arbitrarily I chose Hawala as my research field, and started getting into the depths of it.

It is only now that I get to understand the real depth of my job. My job is more mathematics and psychology (both subjects I love) than law and finance. The world of finance is full of black money, dirty money, tax evasion, and terror financing. My job as an assistant commissioner will be to maximize the income of government treasury and minimize tax evasion. For this I need to understand the psyche of taxpayers, mostly big taxpayers who shy away from paying the tax that is used by government in providing necessary amenities and services. For this I need to interpret patterns in books of accounts. Once an assessing officer (ACIT) understands patterns, he can easily locate where the businessman evades tax. Then starts investigation. After that follow tax additions, penalties, and even prosecution. I can imprison a regular offender of income tax!

But what fascinates me most is Hawala. Hawala helps me appreciate the big games played in the world of finance; the cat and mouse game of regulators and financers of drugs, organised crime, and terrorism. At the same time, Hawala is like the two faced Greek God Janus. It has its own utility for economic development of developing countries (surprised?) and for poor migrants. The challenge is to differentiate between White Hawala and Black Hawala. While black hawala is layered in a complex money laundering process to finance illegal and criminal activities, black hawala is an important remittance system serving developing countries.