The Finance Ministry has decided to arm its tax authorities with exhaustive financial and personal data of Indian residents who use the exemption clauses under the Double Taxation Avoidance Agreement (DTAA) and escape paying taxes in one of the countries. The ministry will request countries, including the US and Switzerland to supplement their data on Indian residents with PAN card information and other vital details.

The move, aimed at checking the violation of the DTAA, has been prompted after Indian tax authorities found that vital data, sent by countries under the DTAA, of Indian residents working or doing businesses in these offshore locations were lacking data on Permanent Account Number (PAN), date of birth, name of parents and their Indian addressess.

“The information is required to check the fraudulent misuse of this treaty. The data will be received on an annual basis,” a source said.

The PAN card data will provide overall data on a taxpayer’s financial transactions and dealings, the source added.

The Foreign Taxation division in the Finance Ministry is the nodal agency to receive such information from various countries under the DTAA agreement.

According to top sources, the authorities have also decided to send these monetary and investment details –exceeding Rs one crore — of such Indian residents to its investigation wing to check possible cases of tax evasion.

The I-T department will also send all this information to its advanced taxpayer database and send it to all the assessing officers across the country through the Chief Commissioners of Income Tax (CCITs).

India has DTAAs with almost 75 countries.

Under the Exchange of Information article in the DTAAs with various countries, “some countries automatically exchange at regular intervals, information relating to payments made by enterprises to persons claiming to be resident of India.”

The payments mostly relate to dividends, interests, royalties, salaries and wages, fees, pensions among others.

The country is also re-negotiating the treaty with Mauritius and other countries while it is entering into such treaties with other nations like Bermuda, British Virgin Islands, Cayman Island, Gibraltar, Guernsey, Isle of Man, Jersey, Netherlands Antilles and Macau.

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Category : Income Tax (28820)
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  1. tushar vaidya says:

    Dear Sir,
    For imports into India of coal cargo from Australia,please advise if DTAA is required by the company receving freight which is registered in British Virgin Island.

    The company is registered in Bristish Virging Island but has its office in Hong Kong.

    Capt T.V.Vaidya

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