1. Black money scam: India not to press secrecy clause in all cases

Black money scam: India not to press secrecy clause in all cases

While seeking information from a foreign country in connection with black money stashed abroad by Indians, the CBDT has decided to refrain from invoking a specific treaty clause of not informing the person, except in special cases, in a bid to avoid delays.

By: | New Delhi | Published: May 18, 2016 2:27 PM
Black money While seeking information from a foreign country in connection with black money stashed abroad by Indians, the CBDT has decided to refrain from invoking a specific treaty clause of not informing the person, except in special cases, in a bid to avoid delays. (Reuters)

While seeking information from a foreign country in connection with black money stashed abroad by Indians, the CBDT has decided to refrain from invoking a specific treaty clause of not informing the person, except in special cases, in a bid to avoid delays.

The clause called “refrainment from prior notification” is stipulated under the Manual for Exchange of Information and it entails Indian agencies to notify in their request that the individual against whom they are seeking information from their foreign counterpart should not be told about it.

The Central Board of Direct Taxes (CBDT), in a latest order, has said that “whenever a request for refrainment from notification is made, it automatically implies that information which is in possession of the taxpayer cannot be obtained and provided by the foreign tax authorities.

“Thus, in many cases, foreign tax authorities are expressing their inability to provide the information when it has to be obtained from the taxpayer due to the refrainment from notification condition set out in our requests.”

The Board instructed further that “therefore, request for refrainment from prior notification may be made only in exceptional circumstances and not as a matter of routine.”

It added that whenever such requests are made they should be backed by “evidence” and proper “explanations” or else the nodal department handling these requests in the Finance Ministry will send the overseas request without the secrecy clause in tow.

The CBDT said: “In case the ‘refrainment from prior notification’ has to be implemented, sufficient explanation/justification may be furnished to demonstrate the necessity of refrainment of prior notification.”

As per global exchange of tax information norms followed by India and a number of other countries, a requesting state or country can invoke the said confidentiality clause if it can “demonstrate through some specific evidence that the request for information is either very urgent or prior notification to the taxpayer or individual under probe could hamper investigation against them.”

Officials said that the CBDT issued the directions in wake of a number of overseas probes to be taken up in the near future including in British Virgin Islands and other tax haven and avoid any kind of “delays”.

Tags: Black Money
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