As the debate on revealing names of those who had stashed money abroad was hotting up, a Parliamentary panel today grilled finance ministry officials on why the confidentiality clause was put in tax treaties in the first place.
A few days after Finance Minister Pranab Mukherjee said the names could not be revealed at this stage due to international commitments, Parliament’s Standing Committee on Finance asked ministry officials why such provisions were included in the tax pacts that came in the way of disclosing the names, those familiar with the development told Business Standard.
The finance minister had said that the names could only be revealed when the Income Tax Department started prosecution and that even he did not know the names. He had said if names were revealed at that stage, no other country would ever give information to India in these matters.
Officials told the panel, headed by former finance minister, Yashwant Sinha, that double taxation avoidance agreements (DTAAs) were being amended. India has already amended pacts with 23 countries to obtain information from their banks.
India has also completed negotiations on 10 new tax information exchange agreements, with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands, out of 22 identified jurisdictions.
It has initiated process of negotiation with 65 countries to specifically allow the exchange of banking information and information regarding taxpayers not covered by DTAA. The government is setting up eight more income tax units overseas.
The panel also asked the officials why the finance ministry was going for amnesty scheme for bring into the country the money illegally parked outside. The officials told the committee that the finance minister did not say that amnesty scheme would, in fact, be announced, but merely set up a committee to look into the matter.
In fact, the finance minister had said that amnesty scheme was a double-edged sword, since it could be criticised for penalising honest tax payers, but would also bring revenues to the exchequer.
The meeting was attended by Revenue Secretary Sunil Mitra and other tax officials. The panel also wanted to know the estimates of black money parked abroad.
The interim recommendations of BJP Task Force in 2009 had estimated the amount of black money between $50 crore and $140 crore, while a current Global Financial Integrity study estimated it at $46.2 crore.
Mukherjee had said all these estimates were based on various unverifiable assumptions and approximations, and so far there were no reliable estimates on black money, both inside and outside the country.
The government has constituted a multidisciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens.
Last week, the Supreme Court had criticised the government on its handling of the black money issue and its reluctance to publicly disclose the name of Indians who had parked their illegal money in LGT Bank of Liechtenstein, a European nation bordering Switzerland.
The government had submitted the names of the account-holders to the Supreme Court but said it could not make them public due to the confidentiality clause in the agreement between India and Germany.
