As part of its strategy to curb offshore tax evasion and promote foreign investment, India has recently operationalised seven new Income Tax Overseas Units (ITOUs) in countries like Germany, USA and France.

A similar Income Tax office in Cyprus has, however, not been activated as India, last year in November, classified the island nation as a notified jurisdictional area and suspended tax benefits.

Both the countries are on the talking table now to revoke the decision taken by India owing to non-cooperation in tax cases.

Sources said the Finance Ministry recently posted seven Indian Revenue Service officers as First Secretaries in Indian Embassies in France, Germany, Japan, Netherlands, UAE, UK and USA after getting approvals from the Prime Ministers Office and the External Affairs Ministry in this regard.

The Government had decided to set up the ITOUs in these eight countries few years back as part of its multi-pronged strategy to combat blackmoney and streamline the flow of investments from these nations into India.

Two such ITOUs have been operational in Mauritius and Singapore for some years now and the positive results from these offices had prompted the Finance Ministry and CBDT to increase the number of such overseas I-T offices.

“Senior I-T officers have started functioning from these foreign offices after they were posted recently. However, the Cyprus ITOU has been kept vacant subject to the outcome of talks between the two countries,” sources privy to the development told PTI.

India and Cyprus had entered into a Double Taxation Avoidance Agreement (DTAA) in 1994, but last year India classified the island nation as a notified jurisdictional area and suspended tax benefits as the country was not providing information requested by tax authorities under the said treaty.

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