The Hindu Business Line : ‘Swiss authorities refused to share data on stashed funds’

New Delhi, May 2 The Centre has refuted allegations that it was slack in its efforts to bring back into India the funds stashed by Indian citizens in foreign banks, especially the Swiss banks.

In its affidavit in reply to a public interest litigation filed in the Supreme Court, the revenue department has said that it was the Swiss authorities, citing DTAA provisions, who had “consistently refused to share bank information” and that the Centre had acted with “utmost expedition” in the matter.

The revenue department affidavit said that the Swiss authorities had taken a stance that the information on bank deposits of Indian residents was not necessary for the application of the double taxation avoidance agreement (DTAA). The Swiss authorities felt that such information was required only for the enforcement of Indian internal tax laws and that it (such information) was not at their disposal under Swiss laws in the normal course of tax administration.

This stance was in variance to the OECD Model Tax Convention, which required States to exchange information even if there is only domestic interest of the requesting State, i.e., enforcement of tax laws of the requesting State, and no provision of DTAA is to be applied.

OECD standards

As per the Organisation for Economic Co-operation and Development (OECD) standards, the limitation of information not being at the disposal of the tax administration because of bank secrecy cannot be used to prevent exchange of information held by banks.

While the Swiss Confederation had entered reservations on these standards, it was only in March 2009 that it decided to adopt the OECD standards and withdraw the corresponding reservation and enter into negotiations for revising its double taxation agreements.

Accordingly, the Union Government has approached the Swiss Government for renegotiation of the Article concerning exchange of information in the DTAA, the apex court was informed.

India’s DTAA with Switzerland was notified in April 1995 and amended through a Protocol on February 7, 2001.

Meanwhile, on the issue of obtaining information from the German Government with respect to Indian account holders in the LGT Bank, Liechtenstein, the revenue department affidavit said that the information was made available on March 18, 2009. However, the said information was made available on the condition of strict confidentiality of contents under the DTAA.It was submitted to the apex court that this information has been forwarded to various tax authorities for action under the Indian Income-Tax law. The Indian tax authorities have now initiated the process of reopening the assessments under the Income-Tax Act 1961 and Wealth Tax Act, 1957.

The affidavit also said that the Centre was unable to subscribe to the position that evidence exists with the SEBI that anonymous entities are misusing Participatory Notes in the Indian markets.

The Centre also refuted the allegation of the petitioners that grant of licence to UBS Bank AG to open a retail branch in Mumbai was to enable acquisition of Standard Chartered Mutual Fund, stating that it was “incorrect”.

Related Stories:
‘Rs 70 lakh cr Indian money in Swiss banks, other havens’

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‘Swiss authorities refused to share data on stashed funds’