Both nations to share tax information from next fiscal

India and Switzerland will start exchanging information on tax related matters from the next fiscal after the new tax information exchange treaty is ratified by the Swiss Parliament tomorrow, paving way for obtaining data on black money stashed there.

“It (information sharing) will take place from the first day of the next financial year, January 1, 2012 for Switzerland and April 1, 2012 for India,” M Ganapathi, secretary (west), ministry of external affairs, said here while briefing reporters on President Pratibha Patil’s just concluded state visit to Switzerland.

The move comes at a time when the issue of black money stashed in Swiss banks has become a major concern back home with political parties and civil society taking up the matter. The protocol amending the Double Taxation Avoidance Agreement (DTAA) between India and Switzerland was concluded in New Delhi on August 30 this year. The revised treaty would allow India to access tax related information from the Swiss authorities with a prospective effect.

One of the most crucial sections of the agreement on the issue of tax related matter is Section 26 which deals with exchange of information. The initial agreement between the two countries was signed on November 2, 1994. It was subsequently amended and a supplementary protocol signed in Delhi on February 16, 2000.

Asked if the agreement signed would be in retrospective effect and whether India would get a list of accounts held by Indians in Swiss banks, Ganapathi said, “the normal practice is that the Central Board of Direct Taxes (CBDT) authorities gather whatever information is there and transmit it to Swiss authorities for relevant return of information.”

He said: “As I have said the competent authority will have to go on the basis of what is in the brief, which is, will collect the evidence, present it to Swiss authorities and they will have to examine and revert back to us.”

Asked if CBDT can ask for information related to an account set up five-eight years back, he said, “What I would say is let me leave it to CBDT to take it up from there because it is very very important that competent authority should be in a position to answer because I am not the competent authority nominated by the two governments. I leave it to CBDT but this is a positive step forward”.

In Switzerland, after amending protocol to the DTAA is introduced in Parliament, it has to wait for 100 days before it comes up as a ratified document. Ganapathi said Swiss authorities informed President Patil that the entire process of ratification could take place “as early as 10 days from on Wednesday”.

He said President also told the Swiss authorities that she hoped the Swiss side would ensure that the protocol “would enter into force expeditiously after the projected schedule and would be implemented effectively”.