Also see: Financial Express: India's Best Banks
Chidambaram's strongly worded letter to his Swiss counterpart Eveline Widmer Schlumpf earlier this month is prompted by lack of progress in tax information sharing by Switzerland after talks between the countries in New Delhi last month.
Chidambaram also told Schlumpf in the letter, released to the media on Thursday, that India's ongoing investigation into some cases of black money would get time barred by the end of this month. In the event of continued denial of access to vital information under the Double Tax Avoidance Convention, India may be constrained to actively consider the options available under our domestic laws, Chidambaram said in the letter.
Under India's Income Tax Act, any payment made by an assessee here to a financial institution or other entity in a tax non-co-operating jurisdiction has to be totally transparent.
All payments to financial institutions in such a jurisdiction will be allowed as a deduction for an Indian assessee that made the payment only if the institution gives an authorisation allowing information sharing. In the case of other entities, the Indian associated enterprise has to maintain relevant records.
Chidambaram also indicated that India may drag the European nation to multilateral foras like G20 for continuing to block its requests for tax information.
Chidambaram said Switzerland has not honoured the terms of the Double Taxation Avoidance Convention between the two nations, under which information about Indians with accounts in Swiss banks has been sought by the tax authorities.
The Indian government is seriously concerned that some Indian taxpayers have parked substantial unaccounted income and assets in offshore jurisdictions and it expects co-operation from those jurisdictions to deal with them effectively, the letter said quoting Chidambaram.