India will be able to access information on money stashed away in Switzerland’s banks — but only regarding transactions dating from April 1 this year, thus dashing hopes of opening up earlier cases.
The revised Double Taxation Avoidance Agreement (DTAA) between the two countries came into force at a time when the issue of black money stashed abroad is at the centre of an intense political debate in India.
“It contains provisions on the exchange of information in accordance with international standards applicable at present,” the Swiss Federal Department of Finance said in a statement about the renewed pact signed yesterday.
As for India, the Central Board of Direct Taxes (CBDT), under the Finance Ministry, also said the country could obtain data for cases dating from the start of the current financial year. “It is also clarified that upon coming into force, the revised DTAA will allow India to obtain banking information (as well as information without domestic interest) from Switzerland in specific cases for a period starting from April 1, 2011,” CBDT said. The revised treaty would allow India to seek information on cases related to tax evasion. Under the earlier understanding, India could only seek bank details in relation to tax fraud cases.
The revised treaty was approved by the Swiss Parliament on June 17. As per the rules of that European country, bilateral tax treaties are subject to public scrutiny for a period of 100 days, which ended on October 6. New Delhi had inked the agreement with Bern to revise the treaty in August last year.
The latest data from the Swiss National Bank shows the total deposits of Indian individuals and companies in Swiss banks stood at about $2.5 billion at the end of 2010.
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The issue of black money was one of the central planks of the Opposition to attack the government in the last Lok Sabha elections of 2009. Even now, it generates hot political debate. Senior Bharatiya Janata Party (BJP) leader L K Advani has said he would highlight the issue during his 40-day, country-wide ‘Jan Chetna Yatra’ that started on Tuesday from Bihar.
Since the treaty would not include the period earlier than April 1, 2011, India would not be able to seek information on black money stashed away in Switzerland banks which might run into billions of dollars, analysts said.
The interim recommendations of the BJP Task Force 2009 had estimated the amount of black money to be between $500 billion and $1,400 billion. A current study by Global Financial Integrity had estimated the present value of illicit money outflow to be $462 billion.
But, the government has time and again said there is no verifiable amount of black money. As such, it has tasked the National Institute of Public Finance and Policy, National Institute of Finance Management and the National Council of Applied Economic Research to conduct studies in this regard.