Need to respect tax treaties, Govt to tell SIT

The Government will approach the special investigation team (SIT) looking into the black money matter and convey its views on respecting existing tax treaties with other countries, said Finance Minister Arun Jaitley.

Respecting the treaties would mean that the SIT would have to favour the presence of “confidentiality clauses” in the agreements that India had inked or proposes to sign.

Most of the tax treaties (about 92 in all) entered by India have a “confidentiality clause”, which has become a bone of contention in the country’s efforts to bring back black money stashed abroad.

The Supreme Court has opined that having confidentiality clauses in tax treaties is not proper and not within the four corners of the Indian Constitution. However, it has left the matter to the SIT.

Participating in a discussion in the Lok Sabha on the black money matter, Jaitley said on Thursday that it was an international norm to have a “confidentiality clause” in tax treaties.

“In all the laws (tax treaties) there is a confidentiality clause and we need to respect it as part of our treaty obligation. There has to be alignment of domestic procedures with international systems and such an approach would be in the best interest of India,” Jaitley noted.

Declining to name people who had stashed money abroad, Jaitley said the BJP Government would not undertake “hasty disclosures”.

Not satisfied with the Finance Minister’s reply on the black money matter, the main opposition Congress party, led by its leader Mallikarjun Kharge, staged a walkout.

Jaitley also highlighted that there are “shortcomings” in both the income tax law and the anti-money laundering law with regard to bringing back money stashed in foreign banks.

“The SIT is also looking at how to fill this gap”, Jaitley added.

The Finance Minister assured the Lower House that the Government would leave no stone unturned in identifying and taking action on all the 627 HSBC Geneva accountholders whose bank details are with the Centre.

Commenting on the Goods and Services Tax, Jaitley said that the Government would most likely introduce the GST Bill in the ongoing Winter Session itself.