To check black money generation, the government today approved signing and ratification of the agreement between India and Seychelles for exchange of information with respect to taxes.
The agreement will stimulate the information exchange between India and Seychelles for tax purposes, which will help curb tax evasion and avoidance, an official statement said.
The decision was taken in the Cabinet meeting headed by Prime Minister Narendra Modi.
The agreement will enable the competent authorities of India and Seychelles to provide assistance through the exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of two countries concerning taxes, it said.
Information received under the agreement shall be treated as confidential and may be disclosed only to persons or authorities (including courts or administrative bodies) concerned with assessment, collection, enforcement, prosecution or determination of appeals, in relation to taxes covered under the agreement, it said.
Information may be disclosed to any other person or entity or authority or jurisdiction with the prior written consent of the country sending the information, it added.
The agreement also provides for a Mutual Agreement Procedure for resolving any difference or for agreeing on procedures.
As such, it said, the agreement does not have any financial implications.
“Only in the event of extraordinary costs exceeding USD 500, the Government of India will bear the same, as per Article 9 of the agreement. India has similar provisions in other such tax information exchange agreements,” it said. India has signed similar bilateral agreements for Exchange of Tax Information with Argentina, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macao, Monaco and San Marino.
The Central Government is authorised under section 90 of the Income Tax Act, 1961 to enter into an agreement with a foreign country or specified territory for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under the Income-tax Act, 1961.
Negotiations for entering into an agreement for the exchange of information with respect to taxes were conducted at Seychelles from June, 8, 9 this year.
Pursuant to this, India and Seychelles have agreed on the text of the agreement, it said.