In a major boost to Modi government's fight against the menace of black money, Switzerland will send details of bank accounts of Indian citizens in Swiss banks from today. The list will include those closed last year. The details to be shared by Switzerland with the Indian tax authorities under the Automatic Exchange of Information (AEOI) framework would include account numbers, credit balance and all kinds of financial income for each Indian client of every Swiss financial institution. The development which will end the era of Swiss bank secrecy, is a major success of the Modi government's fight against black money ever since it first came to power in 2014.
"India will receive information of the calendar year 2018 in respect of all financial accounts held by Indian residents in Switzerland. This will be a significant step in the government's fight against black money as the era of Swiss bank secrecy will finally be over," the Income Tax department said in a tweet.
The announcement follows meeting of a Swiss delegation led by Nicolas Mario Luscher, Deputy Head of Tax Division, State Sectt for International Finance, with Revenue Secretary Ajay Bhushan Pandey and senior tax officials of Central Board of Direct Taxes (CBDT).
During the 2-day meeting in the Capital on August 29-30, both sides discussed bilateral exchange of information matters to expedite execution of tax information sharing requests made by India in specific cases.
"Enhancing collaboration in offshore tax compliance matters were also discussed," the department said.
This would be in addition to details already being shared by Switzerland with India for nearly 100 Indian entities, including individuals and enterprises, on submission of prima facie evidence of their financial wrongdoings, under a bilateral pact for administrative assistance on tax matters.
What it means:
Explaining the AEOI with India, which has come into force from January 1, 2018, the FDF said Switzerland, as a global wealth management hub, is committed to contributing to the integrity of the international financial system and to a level playing field.
Under the AEOI framework, detailed financial information on all Indian residents that have an account maintained by a Swiss financial institution in 2018 will be provided for the first time to the Indian tax authorities in September 2019 and on a yearly basis thereafter.
The information would include accounts that were closed during 2018, it said.
It is feared many Indians might have closed their accounts after a global crackdown on black money led to Switzerland buckling under pressure to open its banking sector for scrutiny to clear the long-held perception of Swiss banks being safe haven for undisclosed funds.
However, the AEOI would only related to accounts that are officially in the name of Indian residents and they might include those used for business and other genuine purposes.
In an explanatory dossier on AEOI, the FDF said if a taxpayer in country A (India) has a bank account in Switzerland, the bank would disclose the financial account data to the Swiss authorities, which would automatically forward the information to the tax authorities in the country A (India).
The Indian authority would thus be able to examine the foreign financial account data and tax necessary action, if required, against the taxpayer.
The information would be grouped into three broad categories of identification, account and financial details.
The identity details would be name, address, date of birth and tax identification number, while account information would include the account number as also name and address of the financial institution.
The financial information would include interest income, dividends and other financial revenue, receipts from certain insurance policies, credit balances and proceeds from the sale of financial assets.
Besides India and Switzerland, a number of other countries have also signed the AEOI pacts as part of a global crackdown on tax evasion.