The Government has ruled out tax amnesty for money deposited by Indians in Swiss banks.
The spotlight turned to the issue on Wednesday when Switzerland and the UK signed an agreement.
Under this, the future income of British bank clients in Switzerland will be subject to a final withholding tax and the proceeds will be transferred to the British authorities.
Switzerland already has such an agreement with Germany.
Commenting on this, a senior Central Board of Direct Taxes (CBDT) official told Business Line , “India will not go for such a treaty. Rather, we would prefer criminal investigation and action thereof.”
According to the Swiss National Bank's Web site, the total liabilities of Swiss banks toward Indians, including fiduciary businesses, as on December 31, 2010, was 1.945 billion Swiss Francs (about Rs 9,295 crore).
Illegal route
The Government believes that the money deposited in Swiss banks has taken an illegal route. So, why give tax amnesty, said the official.
“Money laundering or illegal commission are a criminal offence. So, our effort will be to not just bring back the money but also prosecute the owner,” the official added.
On August 30, 2010, India and Switzerland signed a revised Double Taxation Avoidance Agreement, which would enable exchange of information.
This can help the Government nab tax evaders suspected to have stashed funds abroad.
Also, India can seek bank account details for cases from January 1, 2011, provided the treaty comes into effect this year.
The Swiss Parliament has already approved it, and the pact is now open for public scrutiny. If there is no opposition, it could be effective from October.
Revised treaty
With the revised treaty, the Government's effort would be to contact individual Swiss banks, the official said. This will help unearth blackmoney and get it back into the country.
The Government is under intense pressure from the Supreme Court and the Opposition to track down blackmoney.
It is with this intention that India has signed tax information exchange agreements with five nations, including Cayman Island and the Bahamas. Of these, four are already in force and 17 more are expected to be signed.
The Government also has double tax avoidance pacts with 81 countries, Georgia being the latest.