I-T ex-official moves SC to make declaration of foreign bank A/cs mandatory while filing returns

The Supreme Court has 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.

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 Baker’s ‘Capitalism’s Achilles Heel’ which holds
that half the world’s slush money lying in tax havens belongs 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.

(Source : The Economic Times, dated 30-8-2010)