The Supreme Court on Friday admitted a petition, filed by a retired chief commissioner of income-tax, which suggests that a legislation be made to make it mandatory for taxpayers to declare offshore bank accounts while filing annual returns. The premise behind the suggestion is to enable the government to take effective measures to seize wealth parked in Swiss and other offshore bank accounts by Indian residents.
The petitioner is KVM Pai, retired chief commissioner of income tax, Mumbai and the suggestion it contains is in consonance with the recent legislation passed in the US making it compulsory for US residents to declare their offshore bank accounts, even if such declarations do not yield any tax revenue. Mr Pai also pitches for the setting up of an intelligence unit under the auspices of the income-tax administration to help detect those who have illegal deposits in offshore banks and corroborate the data with the information furnished in their tax returns.
A division bench comprising Justices Sudarshan Reddy and Surinder Singh, allowed Mr Pai, to join an earlier petition filed by jurist Ram Jethmalani, who had moved the apex court last year to persuade the Centre to explore the possibility of retrieving unaccounted money deposited in tax havens.
Quoting a 1980 study carried out by International Monetary Fund (IMF), Mr Pai pointed out that Indians hold the largest share of deposits in Swiss banks. Referring to other studies quoted in the petition, he points out that there are deposits worth $11.6 trillion in tax havens. One such reference relates to Raymond Bakers Capitalisms Achilles Heel which holds that half the world slush money lying in tax havens belong to Indians. Mr Baker has recently estimated the annual capital flight to tax havens at $1 trillion per year.
Mr Pai also states in his petition that the governments of France and the US have been successful in securing the release of huge unreported funds from Swiss banks belonging to US residents but the Indian government did not make any such serious effort except for scheduling meetings with Swiss authorities.
Recently, due to pressure from the US and the UK, the Swiss government agreed to disclose the names of account holders but only if the respective governments formally ask for it. It is understood that the Swiss government has agreed to provide France the details of 3,000 French customers who have deposits worth $4.3 billion in Swiss accounts and the US government with details of 4,450 customers having $18 billion in deposits.
The petitioners rationale for moving the court is that India badly needs the money.
He stated, That most of the deposits lying in various tax havens are unaccounted and no taxes have been paid on the same, thus depriving the country of valuable revenue which could be utilised by the state for providing basic facilities to its citizens such as health care, food, education, social security, clean environment, housing, etc which have been held to be part of the right to life and personal liberty guaranteed under Article 21 of the Constitution of India.
Thus the issue raised in the present application regarding the unaccounted holdings of Indians in Swiss banks and other tax havens has a direct impact on the fundamental right to life as guaranteed under Article 21 of the Constitution.