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CBDT Sends Notice To 50 Indian A/C Holders In Liechtenstein's LGT Bank
THE government has made the first move to home in on individuals and entities who have stashed away black money in one of the offshore banks.
The Central Board of Direct Taxes (CBDT) has sent notices to at least 50 individuals figuring in a list of Indians who hold accounts with LGT Bank, Liechtenstein, a tax haven bordering Germany.
"We have sent notices. Whatever action that could be taken under the law would follow," SSN Moorthy, chairman, CBDT, told ET. Tax authorities have sought information on the source of money lying in the overseas bank, and whether or not the account holders have paid tax.
The list, provided by the German government, reportedly contains the names of some prominent Indian businessmen and industrialists. However, the Indian government is under an obligation not to make the names public, as they were provided under the Indo-German Double Taxation Avoidance Agreement (DTAA). The information exchanged under DTAA is confidential, but the government is free to act upon it.
In the run-up to the polls, the Congress came under attack from the BJP for supposedly not doing enough to bring back the black money parked by several Indians in offshore destinations around the world. At a recent election rally, Prime Minister Manmohan Singh had rubbished these allegations, saying: "The issue is nothing, but an election stunt."
According to international media reports, wealth stashed away by Indians in offshore banks could be in the range of $1-1.5 trillion. Tax Justice Network, an organisation that works towards fair tax treatment to all, estimates the wealth concealed in tax havens across the world at $11-12 trillion. Limitation period law may make accessing a/cs hard
INDIAN income-tax laws have provisions to prosecute an offending taxpayer who refuses to pay tax even after a crystallised demand. If a person holding accounts abroad is served a demand notice, but declines to pay, she/he could be invariably prosecuted under I-T laws.
Legal experts say that prosecution is an ideal tool to bring back unaccounted wealth held by citizens offshore. Mahesh Jethmalani, senior advocate, says that the prospect of prosecution could be the most effective way of bringing such money back to India.
Tax lawyer Beni Chatterjee says that wilful evasion of tax attracts punishment under Section 276 (c) of the Income-Tax Act. The offender can be jailed for a period ranging from seven months to seven years if the amount sought to be evaded is more than Rs one lakh.
Senior tax lawyer and Member of Parliament YP Trivedi says that it's rare for the I-T department to launch prosecution under Section 276 (c). The provision is basically a deterrent, he adds.
The government, in an affidavit responding to a public interest litigation filed by noted jurist Ram Jethmalani and four others, told the Supreme Court that it has the names of Indians holding accounts in the LGT Bank. However, tax experts and senior I-T officials say that there are roadblocks to accessing accounts in LGT Bank because of the limitation period, that bars the I-T department from taking up cases older than six years.
They add that the existing law on limitation needs to be altered. But to be effective, the law should be amended with retrospective effect.
TP Ostwal, senior chartered accountant, says that under the DTAA, information exchanged is confidential, but the provision is not binding to the court proceedings and the government is duty-bound to disclose it to the court. He claims that the confidentiality clause in the Indo-German DTAA would not apply to information from Liechtenstein which is not part of Germany.
m.padmakshan@timesgroup.com
The Central Board of Direct Taxes (CBDT) has sent notices to at least 50 individuals figuring in a list of Indians who hold accounts with LGT Bank, Liechtenstein, a tax haven bordering Germany.
"We have sent notices. Whatever action that could be taken under the law would follow," SSN Moorthy, chairman, CBDT, told ET. Tax authorities have sought information on the source of money lying in the overseas bank, and whether or not the account holders have paid tax.
The list, provided by the German government, reportedly contains the names of some prominent Indian businessmen and industrialists. However, the Indian government is under an obligation not to make the names public, as they were provided under the Indo-German Double Taxation Avoidance Agreement (DTAA). The information exchanged under DTAA is confidential, but the government is free to act upon it.
In the run-up to the polls, the Congress came under attack from the BJP for supposedly not doing enough to bring back the black money parked by several Indians in offshore destinations around the world. At a recent election rally, Prime Minister Manmohan Singh had rubbished these allegations, saying: "The issue is nothing, but an election stunt."
According to international media reports, wealth stashed away by Indians in offshore banks could be in the range of $1-1.5 trillion. Tax Justice Network, an organisation that works towards fair tax treatment to all, estimates the wealth concealed in tax havens across the world at $11-12 trillion. Limitation period law may make accessing a/cs hard
INDIAN income-tax laws have provisions to prosecute an offending taxpayer who refuses to pay tax even after a crystallised demand. If a person holding accounts abroad is served a demand notice, but declines to pay, she/he could be invariably prosecuted under I-T laws.
Legal experts say that prosecution is an ideal tool to bring back unaccounted wealth held by citizens offshore. Mahesh Jethmalani, senior advocate, says that the prospect of prosecution could be the most effective way of bringing such money back to India.
Tax lawyer Beni Chatterjee says that wilful evasion of tax attracts punishment under Section 276 (c) of the Income-Tax Act. The offender can be jailed for a period ranging from seven months to seven years if the amount sought to be evaded is more than Rs one lakh.
Senior tax lawyer and Member of Parliament YP Trivedi says that it's rare for the I-T department to launch prosecution under Section 276 (c). The provision is basically a deterrent, he adds.
The government, in an affidavit responding to a public interest litigation filed by noted jurist Ram Jethmalani and four others, told the Supreme Court that it has the names of Indians holding accounts in the LGT Bank. However, tax experts and senior I-T officials say that there are roadblocks to accessing accounts in LGT Bank because of the limitation period, that bars the I-T department from taking up cases older than six years.
They add that the existing law on limitation needs to be altered. But to be effective, the law should be amended with retrospective effect.
TP Ostwal, senior chartered accountant, says that under the DTAA, information exchanged is confidential, but the provision is not binding to the court proceedings and the government is duty-bound to disclose it to the court. He claims that the confidentiality clause in the Indo-German DTAA would not apply to information from Liechtenstein which is not part of Germany.
m.padmakshan@timesgroup.com
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