The finance ministry sources said that Indian officials will have their first round of discussions with officials of Swiss government to evolve a legal system that will enable India to trace black money stashed in tax havens in that country.
They said that such a system could be evolved through a Double Taxation Avoidance Treaty (DTAT) with Switzerland on the model of the agreements reached with countries of the Organisation of Economic Cooperation and Development (OECD).
But, the sources said, that while DTAT could lead to information being secured from Switzerland in specific cases in which individuals would have violated laws in India it cannot guarantee that such persons could also be prosecuted for that offence.
This is because, they point out, that in a similar case in April, Germany gave information in a case where an individual had violated tax laws and on the information given by the German government tax due from him was also collected.
But Germany gave the information on the specific condition that no prosecution would be launched against the individual and the government had to comply with that condition, the sources said.
Sources said getting information from the Swiss banks was not an easy task and first the Indian government should become eligible to ask for such information under a proper bilateral treaty. That was why the two countries would be having discussions. The Swiss government is said to have such agreements with 80 or 90 countries and recently the US government successfully tracked some cases of American citizens stashing away their money there. The US could even prosecute them. The issue of Indians stashing away money in Swiss tax havens came into prominence during the Lok Sabha elections and the Opposition and the government traded charges on the issue. It also came against the backdrop of allegations that a race horse owner Hasan Ali of Pune had stashed away thousands of crore of rupees in Swiss banks and taxes amounting to> several crores of rupees were due from him. The sources said the government was fully seized of the issue of illegal money of Indian citizens outside the country in secret bank accounts and was vigorously pursuing all necessary steps in coordination with the countries concerned. Dates for renegotiation of article concerning exchange of information to broaden scope of existing treaties with countries like Switzerland and Belgium have been finalised. Further, a letter has also been written to Germany for renegotiation through the External Affairs Ministry.Countries, which may be considered for entering into Tax Information Exchange Agreements (TIEAs) have been shortlisted and model TIEA is in the last stage of finalisation, the sources said.
The Income Tax Act, 1961 has been amended this year with a new formulation which will enable the government to enter into tax agreements with non sovereign jurisdiction. Further, options for domestic measures to obtain information on bank accounts maintained abroad by Indian citizens is also under way, they said.