Amended tax rules to help in dealing with black money: Pranab

Finance Minister Pranab Mukherjee today exuded confidence that modified tax avoidance agreements with various countries and pacts with tax havens will help in dealing with the menace of black money.

"Income Tax Department is engaged in ways to tackle with black money," he told reporters on the sidelines of an income tax conference here.

He said the government was amending Double Taxation Avoidance Agreements (DTAA) by inserting a clause on information regarding banking sector and also entering into tax information exchange agreements (TIEA) with several countries, including tax havens.

"These [DTAA & TIEA] are two important instruments which will help the income tax department tackle black money and black money stashed outside...We will able to impose tax on them," Mukherjee said.

DTAAs have been amended (clause on banking sector has been inserted) with 40 nations and TIEA has been sealed with tax havens like Isle of Man, Bermuda and Bahamas.

In absence of a clause on banking sector in DTAAs, the contracting countries were not sharing information in this regard.

However, after the G20 Summit in Pittsburgh and subsequent meetings of Finance Ministers of the member countries, all the 20 countries agreed to amend DTAAs.

Mukherjee also said with strengthening of the transfer pricing mechanism, the government has been able to prevent outflow of Rs 33,000 crore.

"We have strengthened our transfer pricing mechanism through which we are preventing the transfers [of fund] through various dubious practices...Rs 33,000 crore have been detected, which otherwise would have gone out of the country," he said.

Black money has become a big political issue in the country, with the opposition accusing the government of not doing enough to bring back the illegal money stashed abroad.