Income Tax officials may be posted in tax haven nations

According to the recommendations of the committee, there could also be a special team to investigate evasion in cross border transactions, a Finance Ministry source said. The Central Board of Direct Taxes (CBDT) had set up the committee to examine the investigation issues in which abuse of tax treaties and evasion through tax havens are involved.

“The committee has suggested various other sources of information including placing of department officers in key centres used for tax evasion,” said the source. Also, the committee suggested to have separate investigation units to handle cases involving cross border transactions in tax havens.

Cross border transactions

“Considering the specialised nature of investigation required to deal with cases involving cross border transactions, there is a need for separate investigation units to handle such cases,” said the source. The committee has also recommended that India should talk with these nations for exchange of information regarding big international transactions. The committee also suggested having a database of global transactions along with other regulators and enforcement agencies. Companies of other countries route their investment through the nations with which India has double taxation avoidance treaties to take tax advantage of these agreements.

India is engaged in negotiations to stop the abuse of these tax treaties. The newly draft Direct Taxes Code unveiled by Finance Minister Pranab Mukherjee a detailed section on tax avoidance and abuse.

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