Revised tax treaty with Switzerland will help seek specific information on illegal funds
October, 12th 2011
In a statement, the Swiss Federal Department of Finance said the revised agreement contains provisions on the exchange of information in accordance with international standards applicable at present.
As per the latest data from the Swiss National Bank, the total deposits of Indian individuals and companies in Swiss banks at the end of 2010 is pegged at about $ 2.5 billion.
Curiously, while the Swiss government has said that India can seek tax information on cases dating from January this year, the Central Board of Direct Taxes pointed out that information can be sought in specific cases starting from April 1, 2011.
Also, while the treaty will be applicable in Switzerland on income originating in tax years starting on or after January 1, 2012, in matters pertaining to exchange of information, the provisions in the treaty will apply to information referring to tax years which start on or after January 1, 2011, the Swiss statement said.
Under the revised accord with the Alpine tax haven, India will be allowed to seek information on tax evasion cases whereas, under the earlier agreement, the country could only seek bank details in relation to tax fraud cases.
The provisions of the agreement will apply in India to income originating in tax years which start on or after April 1, 2012, the statement said, while noting that the treaty will contribute to further the positive development of bilateral economic relations.
The CBDT said India could obtain data for cases dating from April 1, 2011.
It is also clarified that upon entry into force, the revised DTAA will allow India to obtain banking information [as well as information without domestic interest] from Switzerland in specific cases for a period starting from April 1, 2011, it said.
India had inked an agreement with Switzerland to revise the tax treaty in August 2010. The amended pact was subsequently approved by Swiss Parliament on June 17.
As per Swiss rules, bilateral tax treaties are subject to public scrutiny for a period of 100 days, which ended on October 6.