The income-tax department’s reported move to seek sworn declarations from all those Indians whose names appeared in the Panama papers on whether they held undisclosed offshore accounts is ill-conceived. Not all foreign accounts and foreign registered companies have illicit money or business. Such an exercise could lead to needless harassment of law-abiding citizens, even if tax officers have the same powers as are vested in a court under the Code of Civil Procedure to examine a person under oath. Sure, the matter must be investigated thoroughly, and tough action taken to curb tax evasion.

Rightly, a multi-agency team is probing the list of Indian names contained in the over 11million files leaked from Panama based Mossack Fonseca. To establish audit trails, the tax department must push for effective sharing of information from tax havens such as British Virgin Islands that have reportedly registered companies and trusts — where the details of ownership don’t have to be filed with the authorities.

France has placed Panama on the list of uncooperative jurisdictions. India, which does not have a tax information and exchange-sharing agreement with Panama, could follow suit if Panama does not share information on suspected tax evaders. After all, India had earlier blacklisted Cyprus for similar reasons.

We must also follow Britain and create a Unique Legal Entity Identifier to make companies identify their real beneficial owners. It would be a step towards global cooperation on tax transparency. Here too, effective sharing of information holds the key to trace beneficial owners. India’s tax system also needs an overhaul, to widen the base and lower rates. Intensive training of tax administrators and use of big-data analytics to track evasion brooks no delay.