India has begun tracking down money stashed away in secret bank accounts in Switzerland and Belgium.
The government has finalised dates to renegotiate with Switzerland and Belgium to broaden the scope of the existing treaties. The authorities have also stepped up efforts to bring back money parked illegally in foreign banks.
According to original plans, Finance Minister Pranab Mukherjee was to meet the Swiss authorities from December 10-11 to discuss the issue.
“But I think the date for the meeting has been advanced by a month,” Mukherjee said at the annual Hindustan Times Leadership Summit on Friday.
The government has also prepared a list of countries with whom it will sign tax information exchange agreements.
A model of the agreement is in the last stage of finalisation. The Income Tax Act, 1961, has been amended through the Finance Act, 2009, with a new formulation to enable the government to enter into fresh agreements with other countries.
Options for domestic measures to obtain information on bank accounts maintained abroad by Indian citizens is also under way.
Mukherjee said no estimate had been made of the amount of funds stashed away in Swiss banks. “It was estimated way back in 1985, but since then, no fresh details have been worked out,” he said.
Bharatiya Janata Party leader and former deputy prime minister L.K. Advani earlier said the slush money parked in foreign banks could be in the range of Rs 25,000 crore (Rs 250 billion) to Rs 75,000 crore (Rs 750 billion).
Swiss Ambassador to India Phillippe Welti hinted that his country would be willing to share information with India about bank accounts of tax defaulters after the two sides revised the existing treaty on double taxation in December.
“Once the Indian and Swiss governments have agreed on a possible change in the existing treaty, Switzerland will implement the treaty,” Welti told a television news channel recently.
Delhi-based think tank National Institute of Public Finance and Policy had made an estimate of the black money in circulation in the country. In 1983-84, the amount was between Rs 31,584 crore (Rs 315.84 billion) and Rs 36,786 crore (Rs 367.86 billion).
According to research carried out by economist Arun Kumar, the size of the parallel economy in the country could be around Rs 16 lakh crore (Rs 16.90 trillion), or 40 per cent of India’s gross domestic product — the market value of all goods manufactured and services generated in a year.
Effectively, the government is missing out on about Rs 5 lakh crore (Rs 5 trillion) of tax revenue. This is more than the current fiscal deficit of Rs 4 lakh crore (Rs 4 trillion).
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