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Just about six months ago, members of the BJP had a field day criticising the UPA for its “reluctance” to name those who had stashed black money in overseas accounts. Now the BJP has realised there is not much it can do either. Bilateral treaties on double taxation avoidance don’t allow the names of account-holders to be revealed. But what the Government can do is to use a clause in these agreements that allow exchange of information on account-holders. The only rider is that the information won’t be made public but will be used by the relevant agencies to investigate cases of tax evasion and prosecute the guilty.
India has signed double taxation avoidance agreements with 88 countries, according to Ravishankar Raghavan of the law firm Majmudar & Partners. These help avoid double taxation on the same declared asset in two different countries. Generally, Article 28 of the agreements deals with exchange of information and stipulates that any information on fraud or tax evasion should be kept secret. The information can be disclosed only to authorities such as courts and administrative bodies involved in assessment or collection in relation to taxes.
Though the issue of black money has hogged headline for years in India, nothing much has been done about it. India can learn from Germany which negotiated with Switzerland to get back some of the “billions of unclaimed German assets” hidden in Swiss banks. The agreement allows Germany to get information from its Swiss counterparts by naming a taxpayer, without mentioning any bank. The only condition is that the request for information be genuine.
Recent negotiations with the Swiss authorities could lead to a similar arrangement for the Indian Government. It will help get back some of the ₹14,000 crore (according to Swiss National Bank’s data as on December 2013) that is held by Indians in Swiss banks. That will also give some respite to the BJP, which has already failed on its poll promise to bring back black money to the country within 100 days of forming the Government.
(Prince Mathews Thomas is Deputy Editor)
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