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India’s feat in revising tax treaties with 81 countries, including Switzerland, may not significantly help the government in bringing back the money stashed abroad. It may, though, prove a little helpful in nailing tax evaders who have already shifted their bank accounts from tax havens. Experts agree that the much-hyped treaty with Switzerland, which came into effect recently, could allow for better sharing of information for tax collection purposes. But the larger issue of unearthing black money and checking corruption and money laundering may remain unaddressed for multiple reasons, they add.
Firstly, the provisions of the treaty do not include past banking details — only information after January 2011 will be provided. Secondly, India will have to give specific details of tax evaders to get information about their secret accounts in Switzerland. Seeking information under the treaty would hugely depend upon strengthening revenue intelligence in India where tax evaders have made money. In a treaty, you can’t ask for fishing and roving enquiries. You have to specifically give the details of people about whom information is needed. The Indian government can ask Swiss authorities to collect taxes on its behalf in cases of tax evasion, but can’t insist on repatriation of the money. That has to be done at a diplomatic level. India will have to use its revenue intelligence and tell tax havens about the amount which is due and required to be remitted.
