MUMBAI: The Central Board of Direct Taxes (CBDT), the apex body for tax matters in India, is actively considering a proposal that will allow the income-tax department to ask for information on accounts held by taxpayers in banks abroad.
According to a person directly involved in the development, CBDT is considering adding a column in I-T returns forms to seek this information.
The proposal, sent last week to the office of CBDT chairman and the Prime Minister’s Office, came from KVM Pai, who retired in 2000 as chief commissioner of income-tax, Mumbai.
One of the major assignments Mr Pai had carried out during his career was the assessment of tax liabilities of the accused in the 1992 securities scam, including the Harshad Mehta group.
Mr Pai’s proposal is contained in a document prepared by him on the generation of black money in the Indian economy and the I-T department’s role in checking it.
The suggestions made by Mr Pai assume importance. When contacted by ET, NB Singh, CBDT chairman, said: “These suggestions should be acted upon.” Mr Pai’s proposals come in the wake of reports in the foreign media, of deposits held by Indians in Swiss banks and other tax havens, which is higher than the total value of deposits held by citizens
of other countries.
The proposal also calls for a change in regulations that will enable the I-T department to reopen the assessment beyond six years as stipulated now, in case the taxpayer is found having undisclosed accounts abroad.
Omission of information or furnishing wrong information may invite penalties. Thus, those with bank deposits held abroad will run the risk of penalties if they do not disclose this.
Holding accounts abroad without informing the Reserve Bank of India (RBI) violates Indian laws, especially the Foreign Exchange Management Act (FEMA).
If the proposal does become law, the information furnished will be open for verification by the I-T department. Unlike before, this is possible now, because Swiss banks, bowing to international pressure after 9/11, are more open to parting with information. Mr Pai’s proposal is in view of the new found openness of Swiss banks.
The proposal could also turn out to be the first step on the part of the Government of India to bring in at least part of the money concealed from the I-T department and stashed away abroad. According to a report from a trade body representing Swiss banks and quoted by Mr Pai, Indians hold deposits worth $1,456 billion, an amount much larger than the value of deposits held by others.
Deposits from Russia are estimated at $470 billion, $390 billion from the UK, $100 billion from Ukraine and $96 billion from China. However, the veracity of this number, $1.456 trillion, which is more than the size of India’s GDP could not be independently verified. On the face of it, the figure is implausibly high.
Source : The Economic Times.