To bolster capabilities of agencies probing foreign black money cases, India has begun the process of adding a new clause in its international tax treaties that will allow sharing of exchanged data between the multiple law enforcement departments, removing the rider of confidentiality that hampers the investigation. The new clause is being inserted in the Double Taxation Avoidance Agreements (DTAA) so that the data once obtained by the Central Board of Direct Taxes (CBDT), the nodal department for tax information exchange, could be shared with sister agencies like CBI, Enforcement Directorate, the Directorate of Revenue Intelligence and others for probe under money laundering, corruption, customs and excise duty evasion and other laws.
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A revised DTAA, with the new clause, was signed here today between India and Kazakhstan by CBDT Chairman Sushil Chandra and Kazakhstan Ambassador to India Bulat Sarsenbayev. The protocol for this DTAA specifically mentions that the information received from Kazakhstan for tax purposes can be shared with other law enforcement agencies with authorisation of the competent authority of Kazakhstan and vice versa.
“This clause is essentially going to be introduced in most of the new and revised DTAAs or Tax Information Exchange Agreements (TIEAs) that India signs henceforth, in consultation with the contracting partner nation. “A number of overseas black money probes were facing the hurdle of confidentiality of information exchanges, hence even the government probe agencies were not able to share such data as promptly or readily as it should have been,” a senior official said.
In the past, he said, the probe agencies like the ED and CBI faced problem of not being able to obtain information from the I-T department while investigating the HSBC accounts list or the Liechtenstein accounts and the latest lists of Indians holding stash abroad as revealed by the ICIJ. “Other agencies like ED or CBI had to knock the doors of a court to get such an information from the tax department which consumed a lot of time and resources when it should happen promptly given the government’s focus on combat against black money,” officials said.
With the addition of the new clause, the tax department would be readily able to share the overseas data received with other agencies by following an official procedure, they said. “This is a preparation for the future. The global tax investigations are moving towards an era of automatic exchange of data and information against tax evaders and money launderers. A number of DTAAs and TIEAs will be forged or revised this way,” they said.