First Germany, now UK objects to India ‘breach’ of secret bank data
The United Kingdom (UK) has followed Germany in lodging a formal protest with the Finance Ministry over the alleged breach of confidentiality of data and secret banking details received via diplomatic channels.
While German authorities objected to the manner in which 18 names of Indian account holders in the LGT Bank, Liechtenstein, were first disclosed to the Supreme Court and later made public, the authorities in UK last month protested after details of transactions made by a retired Indian Navy officer appeared in the public domain.
In both cases, information was received on the basis of DTAAs (double taxation avoidance agreements) signed by India which have a confidentiality clause and stipulate that shared information should only be used for the purpose of tracing undeclared assets and tax collection.
As a result, Finance Ministry officials told The Indian Express, exchange of information from Germany and the UK to references sent by India have dramatically slowed down.
“It has become a serious problem, especially since we have a large volume of references pending with the authorities in UK. We are now trying to convince the two countries that disclosure of information in both cases was not done by us,” an official said.
UK authorities were upset over media reports on how Income Tax authorities had traced payments of approximately 2.4 million pounds, routed through the island of Jersey, were made to a retired Rear Admiral by a UK-based defence company.
Following information received through the Indo-UK “automatic route”, Income Tax authorities first conducted raids and later confronted the retired officer with the data. Later, more undisclosed accounts of the same officer were said to have been located.
UK authorities were miffed at this breach of the confidentiality clause and formally protested with the Indian CA (competent authority), the person designated to receive all confidential data and banking details.
The CA counterpart in the UK has since been informed in writing that the CBDT (Central Board of Direct Taxation) had no role in information appearing in the press, that India was awaiting replies to a long list of references it had sent.
The protests by Germany and UK have had other consequences. For one, the CBDT has slowed down exchange of information to the Enforcement Directorate on undisclosed income in cases such as owners of tax haven account holders in the British Virgin Islands (BVI) as well as Indian account holders in HSBC’s Geneva branch since similar confidentiality agreements have been signed.
The SIT (special investigation team) constituted by the government has also been informed about the protests and advised that identities and data on foreign bank account holders should not be shared with anyone.
