Eight I-T overseas units caught in MEA red tape

Eight income tax overseas units proposed to be set up to check the menace of black money and illegal funds abroad,has apparently been tied up in red tape.

Eight income tax overseas units proposed to be set up to check the menace of black money and illegal funds abroad,has apparently been tied up in red tape. The units,which were to start operations last year,have still not been able to take off given the objections raised by the ministry of external affairs MEA.

The ministry has raised concerns regarding setting up of these units in the eight countries including the US,the UK and Japan on the grounds that the missions abroad already accommodate officers from other services like the customs and economic services,and appointing income tax officials in them will add another such layer,creating imbalance,a finance ministry official told The Indian Express.

The official said that although the proposal of deputing eight senior IRS officers as first secretaries in the Indian missions of the US,the UK,Germany,France,the Netherlands,the UAE,Cyprus and Japan has received clearance from the appointment committee of cabinet and the finance ministry,it is still awaiting finalisation of procedures from the ministry of external affairs.

Establishing the units were a part of the governments efforts to tackle black money.

The first two I-T overseas units ITOU were set up in Singapore and Mauritius in 2010 and it was announced that the network would be expanded by establishing eight more units.

In Budget 2012-13,former finance minister Pranab Mukherjee allocated Rs 18.20 crore for establishing the units,up from Rs 2.41 crore in 2011-12.

The units are required to help the income tax department liaise with authorities in these countries in tax evasion cases and issues pertaining to international tax treaties like double taxation avoidance agreement.

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Given the fact that many tax disputes and probes are linked to some of these countries,the finance ministry had expected that having such units in such jurisdictions would help the investigation process.

The response from Singapore and Mauritius was very good. Not only has exchange of information and financial data gathering improved,providing clarity on taxation queries from investors has also helped in building a positive image of the Indian tax authority, the official said.

Delay in setting up the units,the official added,is a cause of concern especially when high-profile tax cases like Vodafone are in dispute with the income tax department.

The ITOU officers assist in exchange of information on the request of the field officers following which investigation is being conducted by the field officers. The units are instrumental in exchange of tax-related information and mutual agreement procedures.

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Moreover,the I-T overseas units are also expected to help foreign investors take informed investment decisions by making them understand Indian tax laws.

Lying in wait

The units,which were to start operations last year,have still not been able to take off given the objections raised by the ministry of external affairs

MEA says missions abroad already accommodate officers from other services and appointing I-T officials will add another layer,creating imbalance

Establishing the units were a part of the governments efforts to tackle black money. The Budget 2012-13 saw Rs 18.20 crore allocated for establishing them