 "Jayant Sinha")
In a note of caution for black money holders, Minister of State for Finance Jayant Sinha said non-disclosure of foreign assets would become a risky affair from 2017, as the government would start getting information from other countries automatically from that year.
Speaking at the sixth meeting of the Group on Automatic Exchange of Information (AEOI), he said the Central Board of Direct Taxes (CBDT) has constituted a 'Information Security Committee' to ensure confidentiality of data received from foreign countries.
"Non-disclosure of foreign assets will increasingly become a very risky affair for taxpayers ... Strict bank secrecy has ended, and a new environment of transparency is now operational," Sinha said.
Besides, steps are being taken to put in place a robust information security mechanism in the income tax department by constituting the committee at the level of CBDT and local information security commission at cadre control and through issuance of guidelines, he said.
The tax department will come up with a revised guidance note of AEOI before December 31, 2015. It will provide guidance to financial institutions, regulators and tax department officers for ensuring compliance as per AEOI norms. "The income tax rules and guidance notes are formulated taking into consideration requirements of both Common Reporting Standards and Foreign Account Tax Compliance Act (FATCA)," he said.
Sinha said the problem of offshore tax evasion and flow of illicit money can be addressed only by the free flow of financial account information exchange amongst countries on an automatic basis.
India has started receiving information through AEOI route under FATCA from USA since September 30. Further, under the multilateral agreement India will start receiving information from other countries under AEOI route from 2017. Sinha also hinted that there might not be any change in the Participatory Notes rules at the moment, calling them 'strict and robust'.
"As of now, the kind of reporting requirement and the kind of vigour with which we follow through... on the identity of P-notes holders is actually fairly good and strict in terms of really understanding who is it and whether they are legitimate institutions that are transacting through P-notes," said Sinha. This assumes significance as the Supreme Court-appointed special investigation team (SIT) on black money had in July asked capital markets regulator Securities and Exchange Board of India to review its regulations on P-notes and identify their end-users. He added Sebi has over the years strengthened the know your customer norms associated with P-notes.
"Overall, the framework is quite robust," Sinha added.
