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India is setting up eight more income-tax overseas units as part of its efforts to strengthen its tax administration machinery, the Finance Minister, Mr Pranab Mukherjee, has said.
The eight countries where the income tax overseas units have been recently created are the US, the UK, Netherlands, Japan, Cyprus, Germany, France and UAE. The Central Board of Direct Taxes (CBDT) is now in the process of deploying officers at these locations.
As on date, India has two income-tax overseas units located in Mauritius and Singapore. Once TIEAs are finalised with priority countries/jurisdictions, the Government will review creation of more income-tax overseas units depending on the requirements.
Meanwhile, the Government is also setting up an exchange of information (EOI) cell, which will help in effective exchange of information to curb tax evasion. This cell is being created within the foreign tax division (FTD) of the CBDT.
Mr Mukherjee also said that the existing set-up in FTD is being strengthened and additional manpower has been put in place.
On the double tax avoidance agreement (DTAA) front, India has already initiated the process of negotiation with 65 countries to broaden the scope of Article concerning exchange of information to specifically allow for exchange of banking information and information regarding taxpayers not covered by DTAA.
“As on date, negotiations have been completed with 10 existing DTAA countries, including Switzerland, to update this Article. Agreed texts have been initialled. Thirteen new DTAAs have also been finalised where the exchange of information article is in line with the international standards. In short, negotiations/renegotiations of DTAAs with 23 countries have been completed,” Mr Mukherjee said.
To enlarge the scope of DTAAs, provisions for assistance in tax collection abroad are included in some of the recently concluded DTAAs. A provision regarding assistance in tax examination abroad is included in all the negotiated or signed TIEAs which will enable the revenue department to send its officers abroad for tax examination. “We are negotiating inclusion of this clause in the existing and new DTAAs also,” a revenue department official said.
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