Government can track black money stashed abroad

In a major breakthrough, India can now trail “ black money” parked by its citizens in banks in Switzerland and nine other tax havens. The new Tax Information Exchange Agreements signed with these countries that are among 22 countries with no tax or low tax regime will enable the Indian government to seeks details of money stashed by the Indians in their banks. Same kind of pacts are being pursued in the remaining 12 countries.

A protocol signed with the Swiss agencies on August 30 removes the hurdle posed by the Double Taxation Avoidance Agreement (DTAA) signed in the past with the Swiss Federal Council that denied access to banking information.

A similar protocol is being pursued with Germany which has so far not agreed to revise the DTTA that bars exchange of information. The government on Friday filed an affidavit and submitted to the Supreme Court a set of 16 documents, including exchange of communications between the Reserve Bank of India and German Government, in a sealed cover.

Director A Sreenivasa Rao indicating intensified surveillance on Indians visiting abroad to park their funds in foreign banks. It came in response to a PIL (Public Interest Litigation) by noted lawyer and former law minister Ram Jethmalani seeking direction to the government for disclosure of the account holders stashing away the ill- gotten money in the foreign banks.

“ All investigation directorates of the Income Tax Department have been alerted to gather information of foreign visits by Indian citizens to Switzerland and to keep a close watch on collection of evidence on foreign bank accounts during search and seizure operations,” the affidavit said.

It said the protocol signed with the Swiss government and its agencies would allow exchange o information relevant to administration or enforcement of the domestic laws concerning taxes.

The Bench of Justices B Sudershan Reddy and S S Nijjar, however, pulled up the government for maintaining secrecy over names of individuals who are being proceeded for illegally taking out money to foreign countries for deposit in their banks.

While fixing the next hearing on January 14, it disapproved the government opting to file in a sealed cover copies of the showcause notices issued to two persons, including Pune billionaire stud farm owner Hassan Ali.

The court was told that a demand of Rs 24.26 crore has been raised against 18 Indian citizens who had parked their money unauthorisedly in the LGT Bank of Liechtenstein to evade tax. The assessment of their accounts showed non- payment of tax on a total of Rs 43.83 crore. The court was told that penalty proceedings for “ concealment of income” have been also initiated against the culprits.