Seeking the help of a friendly official or agent of a foreign bank to open a bank account overseas may not be a good idea as tax sleuths have their eyes on them and could soon be knocking at your doors.Income tax sleuths are keeping a close watch on the agents of the foreign banks that facilitate opening of such accounts.
The issue of foreign bank accounts had figured in the discussions at an internal conference of the IT department few months back after which field has been instructed to intensify tab on all sources that could provide data on foreign accounts, a tax department official told media.
Specific data on bank accounts will help the tax department seek information from other countries about Indian assets stashed away overseas, facilitated by the government’s efforts to renegotiate its tax treaties with other countries. Under the OECD model of tax treaties, a country can source data on foreign assets and bank accounts of its nationals from countries with it has double taxation avoidance agreements, or DTAAs, but only in cases where it has specific information.
No fishing or roving enquiries are entertained under the tax treaties. India has similarly renegotiated its tax treaty with Switzerland, which will allow income-tax authorities 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.
Keeping a tab on agents or officials of banks that facilitate opening of overseas accounts will help tax authorities identify cases of tax evasion and seek very specific information from its counterparts in other countries. The current rules require Indian taxpayers to disclose their global income when they file tax returns . If they fail to do it, they have the option of filing a revised return after forking out the tax money along with the penal interest.
The tax department has found it difficult to locate overseas accounts, which rarely have paper or electronic trail as transactions are mostly in cash routed through tax havens . The direct taxes code seeks to check this by making it mandatory for both individuals and corporates to declare foreign bank accounts in their combined wealth and income tax return. Simultaneously, New Delhi is also seeking to enter into wider tax information exchange agreement with tax havens to source information about Indian nationals.
The government is in talks with Bahamas, Monaco , Panama, Seychelles, St Kitts & Nevis and the Maldives. The tax department also plans to create divisions and post officers at the Indian missions in the US, the UK, the Netherlands, Japan, Cyprus, Germany, France and the UAE for raising the vigil on evaders and greater exchange of information.
India has already taken action on the information it had received from Liechtenstein’s top bank, LGT and some account holders in HSBC, Switzerland , that had suffered a data theft.