The government has concluded the renegotiation for widening the ambit of its tax treaty with Switzerland to access information on swissbank accounts, a big step towards tracing Indian money stashed away overseas. The tax treaty has been amended on the lines of the OECD Model Tax Convention, which means it will not provide for roving enquiries, or fishing expeditions as they are commonly called.
The revised agreement is expected to be taken up by the Cabinet shortly, a senior official with the Central Board of Direct Taxes said.
The new treaty will be notified by India immediately after it is signed, but the Swiss authorities will be able to put the agreement into effect only after it is ratified by their Parliament.
India’s income-tax authorities will be able to access information on Swiss bank accounts of Indians more easily, but only in specific cases where they have a prima facie evidence of wrongdoing.
For example, I-T sleuths can now source data on bank accounts used to acquire stakes in some Indian Premier League franchisees. The availability of information would help the I-T department in its investigation.
The Enforcement Directorate has already issued show cause notices to some Indian citizens for maintaining banks accounts in Switzerland and the government has initiated steps to elicit requisite information from Swiss authorities.
“The renegotiation of the double taxation avoidance agreement (DTAA) between India and Swiss Confederation has been concluded. The matter is being actively pursued for early entry into force of the amended DTAA,” finance minister Pranab Mukherjee said on Friday in reply to a query in Lok Sabha.
The government had approached Switzerland in April 2009 to renegotiate the DTAA to get access to information on bank accounts.
Switzerland has also amended tax treaties with the US, France and Italy.
The issue of tainted money stashed away in Swiss bank accounts had taken centre stage during general elections in India last year and has again come to limelight after the US entered into a deal with leading Swiss bank UBS on information exchange on tax evaders.
The information exchange in this case was under a deferred prosecution agreement between UBS and the US department of justice and not US-Swiss DTAA.
India is pursuing the issue of exchange of information with other countries as well and would seek amendment in tax treaties with them. The move is in line with a decision taken at the G-20, which took up the issue of tax havens.
