The Indian Express investigation of a wider list of Indian names in a global list of account holders and their balances for 2006-07 with the HSBC’s Swiss private banking arm, brings confirmation that when it comes to dodging tax or stashing away wealth, it is public figures who are in the lead. The Swiss leaks, which show 1,195 Indian clients of HSBC — almost double the 628 names the French government handed over to India in 2011 — feature top businessmen, diamond traders, NRIs and a few political families in India and show a balance of Rs 25,420 crore. As the probe carried out by this paper, in partnership with the Washington-based International Consortium of Investigative Journalists and the Paris-based Le Monde shows, globally, the total balances are over $ 100 billion spread across 200 countries. The fresh revelations put more pressure on the Narendra Modi government to deliver on its poll promise of bringing back illegal wealth stashed abroad.
Finance Minister Arun Jaitley has said that the new names in the HSBC list will be probed. The minister’s response is welcome. The special investigation team appointed by the Supreme Court must take note and widen the scope of its probe into black money. Jaitley has also said that mere names aren’t enough and hard evidence would have to be furnished to punish tax dodgers. That’s why India needs to step up its efforts to clamp down on tax evasion and banking secrecy. Globally, such efforts have been ramped up, especially in the backdrop of sluggish growth forcing governments to cut welfare spending. The US has forced some top Swiss banks to provide data on American clients and fined them for aiding tax evasion. A new law — the Foreign Tax Compliance Act — puts the burden on foreign institutions to report American account holders or pay a 30 per cent withholding tax on their investments in the US. Other countries, including Britain and the EU, are tightening regulatory and other requirements to combat tax evasion.
India must proactively sign agreements for automatic exchange of information on financial accounts maintained by Indians abroad. Along with joining the global effort to squeeze tax dodgers, the government should make it easier for India’s entrepreneurs to do business. What will help most is a stable and simple tax regime and a clear sunset clause for eliminating the special tax dispensation for investments flowing from Mauritius — a route used by many businessmen to rob the country of its legitimate tax revenue.