Outed in lists, HSBC account holders lining up to declare

Finance Ministry officials and chartered accountants, who have been busy filing applications under the compliance scheme, confirmed that among the declarations made, several have come from either Indians named as offshore company owners in the British Virgin Islands or are HSBC bank account holders in Geneva — lists of both sets of offshore entities with assets in these jurisdictions have been published in The Indian Express in 2013 and 2015 respectively as part of projects done in collaboration with The International Consortium of Investigative Journalists (ICIJ).

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Officials said that with several names of BVI and HSBC offshore asset holders being outed, they have no option now but to declare the holdings under the ongoing compliance scheme. Moreover, the Central Board of Direct Taxes (CBDT) has been in touch with authorities in BVI and Switzerland, receiving a steady flow of information on precise money deposits and purchases, even details of assets subsequently procured and routed through these offshore entities.

The compliance scheme envisages a payment of 30 per cent tax and 30 per cent penalty on any undeclared offshore asset and a retention of 40 per cent of the declared amount and immunity from prosecution and imprisonment, which will be the case should any undeclared asset be detected once it ends on September 30.

In practice, while the online option for declaration is open, applications have been filed in person by chartered accountants or the applicants themselves via a single-window at the Income Tax headquarters in New Delhi.

What applicants find vexing is that the CBDT has been consulting the Finance Ministry’s FTTR (Foreign Tax and Tax Research) division to find out if the same information on the offshore assets has already reached them through the Double Taxation Avoidance Agreement (DTAA) or some other route. In such cases, the declarations are being rejected. But sources said this process is taking far too long and the compliance window is open for only a few days more.

For instance, one Delhi-based chartered accountant told The Indian Express that his application of a “hefty” declaration was among the first ten be be filed in early August when the scheme opened but he is yet to receive a confirmation from the CBDT if it has accepted or not.

“This is a serious flaw in the scheme. Despite several reminders, officials are taking far too long to tell us if the declaration is invalid since they already have the information in their database,” the chartered accountant said.

The other aspect baffling experts is that though the all-India serial number put on applications has crossed the 19,000 mark, the value of declarations of offshore assets appears to be very small.

A Kolkata-based accountant, who submitted a bunch of applications Wednesday, said: “The serial number I was given was over 19,700 and any declaration under Rs 5 lakh is not being accepted. I expect thousands of crores will come in by the time the scheme ends on September 30.”