June 13, 2011 / 19:16 IST
India has sought the Organisation for Economic Co-operation and Development's help in mounting pressure on countries that are reluctant to disclose bank account details of Indians who have stashed illicit funds abroad, Finance Minister Pranab Mukherjee said.
The Congress-led government in Asia's third-largest economy is facing protests from several civil society groups and opposition parties against its alleged apathy in ploughing back billions of dollars of ill-gotten wealth parked in tax havens by many Indians.
"While countries have accepted to end bank secrecy in general, some countries have agreed to do so only from prospective date and are not willing to exchange past banking information," Mukherjee said on Monday.
He was speaking at an international tax conference jointly organised by Paris-based OECD -- a group of 34 industrialised countries -- and India's Ministry of Finance, which was attended by the OECD head Angel Gurria and tax experts from 30 countries.
Mukherjee's statement came as two hunger strikes over corruption in India also raised the issue of black money or illicit funds, and the government's inaction to repatriate them.
Mukherjee said competition among tax havens encourages many Indians to park huge undisclosed income abroad, thereby causing revenue losses.
"The concerns are not only on account of protecting revenue base, but also linked to the financing of activities which are detrimental to national security interest."
He also said India would take appropriate steps against those countries that did not cooperate against tax evaders.
The government has developed a "toolbox" to deal with non-cooperative jurisdictions by making appropriate changes in the Income Tax Act, 1961, Mukherjee said.
India could impose at least 30% tax deduction at source on payments made to entities located in non-co-operative countries and jurisdictions, finance ministry officials said.
Tax authorities say funds worth billions of dollars have been deposited by many Indians in Swiss bank accounts and other tax havens to evade taxes.
Global Financial Integrity (GFI), a Washington-based think-tank, has estimated illicit outflows of about USD 16 billion a year from 2002-2006, about 1.5% of India's gross domestic product (GDP).
India is negotiating Double Taxation Avoidance Agreements (DTAA) with several countries and also entering into Tax Information Exchange Agreements (TIEA) with tax havens.
"There is an urgent need to revisit existing legal framework developed by OECD in this regard," Mukherjee said.
"India is ...suffering from the fact that some of its citizens are using some countries to put their money to avoid paying tax," Gurria said.
"We are working on every aspect of it," he added.
