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India parliament passes key Modi bill on 'black money'

[NEW DELHI] Lawmakers on Wednesday approved a crucial bill that aims to unearth billions of unaccounted for dollars believed to be illegally stashed in foreign banks by Indians to avoid paying tax.

The upper house of parliament passed the bill that calls for fines as high as ten million rupees (about US$156,500) and prison terms up to ten years for offenders.

The passage of the legislation underscores Prime Minister Narendra Modi's resolve to trace hidden and undeclared cash outside the country, known as "black money".

Mr Modi's Bharatiya Janata Party (BJP) won the biggest mandate in 30 years last May on pledges to revive the economy and end corruption.

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Mr Modi pledged during his high-octane election campaign to "bring back black money within 100 days" of being elected, after accusing the previous Congress Party-led government of failing to crack down on the issue.

He set up a team of regulators and ex-judges to identify illicit fund-holders and repatriate money as soon as he took office.

Illegal deposits abroad cost India billions of dollars in lost revenue. According to the Washington-based think-tank Global Financial Integrity, India suffered US$344 billion in illicit outflows between 2002 and 2011.

The government has already submitted a list of people with illegal foreign bank accounts to India's top court, which is monitoring the case.

But the latest bill's passage is a rare victory for Mr Modi in the upper house, where his coalition lacks a majority and regularly faces opposition protests.

Mr Modi's struggle in the house has stymied his economic agenda, especially after furor over a controversial land-buying law and a further delay in the long-awaited goods and services tax (GST) bill which was sent for scrutiny to a committee earlier this week.

The GST bill aims to end India's patchwork of taxes under which each state can tax different commodities at different rates. The move would stop rival states competing for business through taxes.

It will now be introduced in the next parliamentary session in July.