India signs new tax treaty, widens probe ambit

NEW DELHI: India has signed OECD's multilateral convention on tax matters that will help the government not just get information from other countries but even enable it get assistance in recovery, something that has proved elusive.
Further, Indian tax officials can now approach the other 31 signatories to question individuals and also examine records. Even documents can be serviced in other countries and past information in criminal matters can be exchanged."The information received under the convention can also be used for other purposes besides those related to tax cooperation, for example to counter money laundering with the approval of the supplying state," the finance ministry said in a statement on Friday.
The Mutual Administrative Assistance on Tax Matters also provides for examination of tax affairs of the taxpayers simultaneously in their own territory and share the relevant information with each other.
"This will give a fillip to the efforts of the government in bringing the Indian money illegally stashed abroad," the finance ministry said.
The agreement follows a decision taken at the G-20 recently and will arm the government with more tools to access information and funds from overseas. Finance minister Pranab Mukherjee had complained that the existing system of Tax Information Exchange Agreement had not yielded sufficient results and wanted them strengthened at the level of G-20.
The convention, which has 31 signatories, was earlier available for members of the Organisation of Economic Cooperation and Development (OECD) and the Council of Europe. It was amended in 2010 to include others.
The Mutual Administrative Assistance on Tax Matters is based on international standard of transparency and exchange of information and not only facilitates the exchange of information, but also provides for assistance in the recovery of taxes, the release said.
It is multilateral and a single legal basis for multi-country cooperation as against the Double Taxation Avoidance Agreements (DTAAs) and the Tax Information Exchange Agreements (TIEAs) which are bilateral.