India will now have the right to track banking information from Switzerland. Cases like the IPL scam or the Madhu Koda mining scam where the Indian revenue department could not get information about the numbered bank accounts of those prosecuted may now be investigated with ease, even though finance minister Pranab Mukherjee told Parliament on Tuesday that the ?provision will be applicable only for prospective information and not for past information?.

India and Switzerland on Monday signed a revised double taxation avoidance agreement which substantially expands the scope of information to be shared.

The new agreement means in all those cases where someone has run afoul of the Indian tax authorities and has a Swiss account, New Delhi can obtain information on them from Berne. The Swiss government will not insist on India proving that a Swiss law has also been violated by the offender before offering information. As the minister explained in his statement in both houses, ?There is a specific provision to ensure that information will be exchanged even if there is no (Swiss) domestic interest. There is (also) a specific provision for providing banking and ownership information.?

Finance ministry officials said while the new agreement covers only prospective cases, there is no bar on the government opening fresh cases to obtain the data. It will also block treaty shopping ? a legal route often used by companies to claim tax relief in India, even if they enjoyed a tax-exempt status in Switzerland.

The data can now also be shared with other investigative agencies like the Enforcement Directorate, under an escape clause in the new agreement, the officials explained. On record, Mukherjee said the information exchanged ?is to be used for tax purpose only. However, the new article also provides for use of information by such other purposes which are allowed under the laws of both States and the competent authority of the supplying State authorises such use?.

In the wake of the financial meltdown of 2008, countries like the US and the UK had accused tax havens including Switzerland of money-laundering through numbered bank accounts. While the US has reworked information sharing mechanisms with Switzerland, India has been stymied so far.

The signing of the double tax avoidance agreement is a major step for India to deal with cases where the trail of tax evasion has run cold at the Swiss border. While there are no clear estimates of the amount involved in the Madhu Koda scam for instance, the five Swiss bank account numbers unearthed by the income tax department is expected to run close to $1 billion.

The agreement will come into force after ?the completion of internal process by the Switzerland side? said the minister. He said at present, income from international shipping is not covered under the DTAA. This is now sought to be included in the DTAA by providing for residence-based taxation for shipping income from international traffic.

Explaining the way treaty shopping has been blocked, the minister said ?earlier treaties used to cover tax-sparing provisions where if the income is exempt in one country, the other country used to provide corresponding relief even if such taxes are not paid due to exemption.

However, the Indian government no longer supports this method and is moving away from profit-based exemption.

Tax-sparing (to the extent of 10% of interest income) is currently there in the existing DTAA. Therefore, it is sought to be deleted in the Article concerning elimination of double taxation?.