Curbs on black money abroad: Govt revising tax treaties to share data with ED, CBI
Sources said this amendment will allow speedy prosecution and imprisonment of account holders as enumerated in the Panama Papers, Liechtenstein and HSBC Geneva lists.
Moving to register criminal charges and impose stricter penalties against those who have stashed black money abroad, India has started revising tax treaties with partner countries by introducing a clause that allows the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) to use the data for prosecution.
Sources said this amendment will allow speedy prosecution and imprisonment of account holders as enumerated in the Panama Papers, Liechtenstein and HSBC Geneva lists who would have otherwise got away with up to 60 per cent income tax on the unaccounted monies instead of facing stricter action and jail time.
Paragraph 2 of the existing Double Taxation Avoidance Agreement (DTAA) is being modified to insert an “enabling provision” to allow information received from a country “to be shared with other law enforcement agencies with the authorisation of the competent authority of that country”.
The justification for this amendment, a government note states, is that it will “enable sharing of information exchanged under DTAA with other law enforcement agencies for non-tax purposes such as money laundering etc”.
Coupled with Section 90 of the Income Tax Act, the note states, the information provided will be used for prevention of evasion/avoidance of income tax as well as “investigation of cases of such evasion or avoidance” in line with domestic laws.
By allowing investigation and jurisdiction under the Prevention of Money Laundering Act, an account holder could be put behind prison for three to seven years, while conviction under the Foreign Exchange Management Act would force an accused to pay a punitive fine up to three times the worth of the violation.
Presently, India has tax information exchange treaties with 88 countries which contain a confidentiality clause forbidding sharing of details with other law enforcement and investigation agencies, and is meant exclusively for taxation purposes, and not for prosecution.
In June 2014, a Special Investigation Team on Black Money concluded that amendments in DTAA were a must to ensure information sharing with investigating agencies without any legal hurdle. At present, it is being done only after receiving approval from a competent court of the foreign nation.
