Union Minister Piyush Goyal on Wednesday announced the signing of the Multilateral Convention treaty for smooth implementation of tax related measures, which will prevent base erosion and profit sharing.
"It is a move that will help achieve a consensus between the developed and developing nations," Goyal said while briefing the Cabinet here today.
"Major decision taken today is to amend the tax treaties related to black money. The signing of the convention will assist in preventing base erosion and profit sharing," he said while highlighting the importance of curbing circulation on black money in the economy said the signing of this treaty is crucial to amend tax treaties.
Drawing upon Prime Minister Narendra Modi's vision of curbing black money through multilateral treaties rather than bilateral ties, as discussed in the G-20 Summit in 2015, Goyal said the move to sign the treaty will help identify loopholes in taxation treaties.
"Profit was being shifted to places with negligible or no tax. This way, the excess money got clearance and thus continued to be in circulation. The fight against black money cannot be solved entirely through bilateral treaties," said Goyal.
Developing on this premise, Goyal said the multilateral treaty is being developed as a means of monitoring such shifting of profit, so that the money can be sent back to where it came from.
To this effect, 3,000 treaties have been modified and facilitated the creation of a multilateral instrument to identify loopholes and prevent treaty abuse, he said.
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Several other initiatives have been discussed during the meeting. On the electrification front, the Cabinet approved the construction of a double-line with electrification between Phephana-Indara and Mau-Shahganj (excluding Indara-Mau) in Uttar Pradesh.
The Cabinet also approved the construction of an electrified third line between Manmad-Jalgaon in Maharashtra.