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Switzerland is biding its time to assess the mood of the next government in India on the issue of unaccounted black money before taking a call on sharing information on accounts of Indians in HSBC, Geneva, sources said. For now, the country will reply to Indian Finance Minister P Chidambaram’s letter but it might not share the information India had sought, sources added.
Switzerland “may not cooperate with the caretaker government” and is waiting for the next government to be formed after the Lok Sabha elections, sources told Business Standard.
It will take concrete measures to assuage India's concerns only if the new government pushes Switzerland, said a top official, who did not wish to be named.
Both the Congress and the Bharatiya Janata Party (BJP) had talked about black money in their manifestos. While the BJP said the process of bringing back black money to India will be put in motion on a priority, the Congress resolved to appoint a special envoy to track and recover it.
Last month, Chidambaram had sent a strongly-worded letter to his Swiss counterpart, threatening action under domestic laws against that country over its reluctance to share information on 500 Indians alleged to have stashed money in HSBC’s Geneva branch.
“In the event of continued denial of access to vital information, which Switzerland is obliged to provide under the DTAC (Double Taxation Avoidance Convention), India may be constrained to actively consider the options available under our domestic laws,” Chidambaram had said in his letter to Swiss Finance Minister Eveline Widmer-Schlumpf.
According to officials, action under the Income-Tax Act could mean declaring Switzerland a non-cooperative nation — similar to what India had done with Cyprus earlier. It will become financially cumbersome for Indians to make transactions with citizens of a nation declared non-cooperative.
Section 94A, which India had inserted in the I-T Act in 2011, empowers it to notify a country non-cooperative if there is a lack of effective exchange of information. If a country is notified as non-cooperative, it affects transactions entered into by assessees in India with citizens of that country. For example, any payment made to a person of that country will attract a withholding tax of 30 per cent.
India had invoked this provision against Cyprus and relented only after the European nation agreed to exchange information and amend its tax treaty with India.
Chidambaram had said Switzerland had not honoured the DTAC terms between the two nations, under which information about Indians with accounts in Swiss banks had been sought by tax authorities.
“Switzerland’s refusal to provide information to India and other countries on the ground that the source of the information requested is based on ‘stolen data’ means that, in practice, Switzerland still believes in bank secrecy and is, therefore, not in tune with the modern era,” he had said in the letter.
India wants Switzerland to provide information on bank accounts held by Indians that were part of an HSBC bank list made available to India by the French government. French authorities had provided a list of over 500 Indian citizens who allegedly held HSBC accounts in Geneva.
The Swiss authorities called the data “stolen” because a French employee of HSBC Geneva had obtained the information through unauthorised means before it reached the French government in 2008-09. India had made its request to Switzerland for details in 562 cases. Chidambaram requested Switzerland to reconsider its move, saying India is seriously concerned some taxpayers might have parked substantial unaccounted money and assets abroad.
Chidambaram also threatened to raise the issue of non-coopearation by Switzerland at international fora such as G-20 and the global forum of the Organisation for Economic Cooperation and Development (OECD).
A Swiss embassy spokesperson said the government of Switzerland would soon respond to Chidambaram's letter.
