Stiff laws sought to trace black money

Stiff laws sought to trace black money

India wants to revise DTAA with 25 nations

Stiff laws sought to trace black money

“India has signed DTAAs with 85 countries. We have sought comprehensive revision of our tax treaties with nearly 25 countries. In some cases the requests have been sent directly while in other cases the matter has been taken up through diplomatic channels,” sources in the Finance Ministry told Deccan Herald on condition of anonymity.

These 25 countries, with whom India has sought revision of existing tax treaties in a comprehensive manner, include Switzerland, Belgium, Brazil, Cyprus, Egypt, Finland, Greece, Indonesia, Italy, Jordan, Kenya, South Korea, Malaysia, Malta, Mauritius, Nepal, the Netherlands, the Philippines, Qatar, Romania, Sri Lanka, Tanzania, Thailand and Zambia.   

“Responses from some of the countries to whom requests have been made for changes in DTAA have been received. In some cases, negotiations have been held,” sources said.

Recently, a high level Indian delegation held the first round of talks with the authorities in Switzerland for re-negotiation of article concerning exchange of information in the tax treaties for specifically, including provisions for obtaining bank-related information.

The Swiss Federal Tax Administration has said exchanging details of bank accounts with India will be possible once the tax treaty, aimed at tracking black money, between the two countries is revised.
The existing DTAA between India and Switzerland does not provide any exchange of information on bank accounts.

“Our tax treaty partners can be requested to assist in collection of tax claim if the tax treaty with that country contains specific provision for assistance in collection of taxes,” Finance Ministry sources said.

Whenever any information regarding money deposited in banks located abroad is received,  action under the provisions of the Income Tax Act and Wealth Tax Act is initiated by the Income Tax Department to bring to the tax-net the income and wealth not disclosed before the tax authorities, sources said.  
“Keeping this in mind, those countries, with whom our DTAAs do not have provisions relating to assistance in collection of taxes, have been approached for inclusion of such a provision,” sources added.

In accordance with currently prevailing international practice, most tax treaties do not have provision for seeking repatriation of money deposited abroad in violation of the domestic laws of the country.
It is learnt that while seeking comprehensive revision of existing tax treaties with different countries, India is proposing repatriation of money illegally deposited in overseas banks.  

The issue of bringing back black money stashed in banks abroad had become a hot topic during the Lok Sabha elections earlier this year.
Besides, the Supreme Court is also hearing a public interest litigation (PIL) accusing the government of inaction in bringing the money back to India. The government has filed an affidavit in the case on the action taken by it on the issue.

The PIL was filed by noted jurist Ram Jethmalani and five others seeking a direction to the government to take action to bring back black money to the tune of Rs 70 lakh crore lying in foreign banks.