Monday, January 27, 2014

Corruption, black money catch govt eye before polls | Business Standard

In what can be construed the  () effect, the Centre has expedited measures against graft and . After cracking down on Cyprus for not sharing information, the government is getting tough with other non-cooperating jurisdictions and setting up offices abroad to tighten the noose around evaders.

Prime Minister  has cleared the long-pending proposal to set up income-tax overseas units (ITOUs) in eight more countries,  officials said. Interestingly, the decisions came after the results of Assembly polls last month, characterised by Congress' defeat in four major states and the impressive debut of AAP in Delhi.

ITOUs, which facilitate and expedite the exchange of information process under double-taxation avoidance agreements (), were established in Mauritius and Singapore earlier. Later, the government announced to create ITOUs at Cyprus, France, Germany, Japan, the Netherlands, the United Arab Emirates, the UK and the US. The decision, however, has come only now. India has been putting pressure on tax havens to share information in whatever way it can. DTAAs are being renegotiated and new Tax Exchange Information Agreements are being signed. When it blacklisted Cyprus for not sharing information, the move was to send a strong message to other tax havens that India could take a similar action against them.

Acting upon the list shared by France giving names of Indians with secret bank accounts in HSBC Geneva, the tax department has been issuing notices to people who are not sharing information. In this case, Finance Minister P Chidambaram recently wrote to Switzerland as without its help the Indian government cannot make much headway.