After banning old 500 and 1000 notes, the government’s next move to fight against black money is to get access to Swiss bank details held by Indians. India and Switzerland signed a pact for automatic exchange of information on Tuesday. This will help Indian authorities to access details of Swiss bank accounts.
A finance ministry statement said that from September, 2019 onwards it will be possible for India to receive all the financial information from the account holders of Indian residents in Switzerland for 2018 and subsequent years.
The Swiss bank will not share details about account details held before the mentioned time period.
The chairman of Central Board of Direct Taxes (CBDT), Sushil Chandra signed the joint declaration and deputy chief of mission of the Swiss embassy in India, Gilles Roduit signed the pact for implementing the automatic exchange of information (AEOI) between India and Switzerland.
Revenue Secretary Hashmukh Adhia twitted, “Signing of joint declaration for implementation of automatic exchange of information (AEOI) between India and Switzerland is a big step.” He stated that now the income tax department will get information from Indian residents accounts in Switzerland from 2018 onwards.
Prime Minister Narendra Modi had met with Swiss President Johann Schneider-Ammann at Geneva on 6th June and discussed the need for exchange of information for fighting tax evasion and they negotiated on the Agreement for AEOI.
On 15th June, Adhia and Switzerland’s State Secretary for International Financial Matters Jacques de Wattevilleha met and agreed to take an early step for implementation of AEOI between the two countries.
The Swiss federal department of finance said in a statement that AEOI is a powerful tool to identify the undesirable trends in cross-border transactions. If it is used properly, it can identify the “errand taxpayers” and “certain schemes to take remedial action through enforcement and policy interventions.” Both India and Switzerland will start collecting data in 2018 and to exchange it from 2019 onwards.
The statement said, “The signing of the joint declaration with India confirms Switzerland’s international commitment to implementing the AEOI standard. Switzerland is thus strengthening its network of AEOI partner states. India meets in particular the high demands in terms of adherence to the principle of speciality and the safeguarding of confidentiality for the data delivered, which are prerequisites for the introduction of the AEOI.”
After the government’s demonetization move some opposition parties demanded that the government should do something to bring back the unaccounted Indian money from overseas, especially from the Swiss bank.
The Switzerland Department of Finance said the automatic exchange of information with India will be implemented based on the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA).
The pact between two countries to battle against black money stashed overseas is an important decision for the government. It is expected that the agreement on AEOI would help to curb the menace called black money.