India may soon join ranks with top world economies by becoming a member of the Organisation for Economic Cooperation and Development (OECD) and speed up its efforts to trace black money in foreign shores and tighten anti-money laundering regulations.
Sources in the finance ministry, engaged in deliberations with the top world economic body, said India's chances have been boosted after the country was inducted as a full-member of another such elite body -- the Financial Action Task Force (FATF) last year, and an entry to the new elite club of economies is expected soon.
According to the OECD rules that are favourable to India's position, the body "advocates exchange of information between tax authorities on request in cases of specific tax enquiries to better equip tax authorities to tackle tax evasion under Article 26 of its model DTAA."
The world body, established in 1961, also "provides a forum in which governments can work together to share experiences and seek solutions to common problems" and considers India to be an "emerging giant" in terms of economy.
The top economic cooperation body presently has 34 member nations which include the US, the UK, France, Germany, Canada, Italy and Switzerland.
India has presently been offered a position of being at an "enhanced engagement" with the Paris headquartered body and such an arrangement, according to the OECD, always has the "potential in the future to lead to membership."
Sources said that India is vying for the membership as it will give the country the much needed 'push' to track black money, curb money laundering and check tax evasion to foreign shores at a time when continuous efforts are being taken to revise and strike Double Taxation Avoidance Agreements (DTAA) and Tax Information Exchange Agreements (TIEAs) with various countries and tax haven nations.
"The OECD has always desired that India reports back action taken and gives feedback on the information passed on by them (in relation to tax treaties and other issues) in order to assess the quality of the information (that the OECD nations sent). India always complied the norms," sources said.
The OECD has also approved the country's efforts related to implementation of tax laws and other socio-economic development indices, they said.
The top body has also done an in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes of India, in 2010.
Indian tax officials currently receive 'coded' information on income earned by Indian nationals abroad. They are not subject to tax there under DTAA as per OECD model tax convention on income and capital.
Countries like the US, Japan, Korea, Finland and New Zealand have sent good information under these codes.