Seize assets of tax evaders, India to tell foreign govts

Caught in a political storm over the black money issue, the government is writing to some countries to freeze the assets of Indians that have not been declared in India and repatriate the money.

The help has been sought under revised tax treaties with these countries.

India has renegotiated Double Taxation Avoidance Agreements (DTAAs) with 29 out of the 79 countries with which it has such agreements, including the US, Mozambique, Tanzania, Ethiopia, Colombia and Norway.

It is in the process of revising DTAAs with Switzerland and Mauritius as well.

The revised pacts include an article on 'Assistance in Collection of Taxes' which allows the two sides to help each other collect taxes due under their respective domestic laws.

In some DTAAs, India is including "conservancy" measures, too.

The measures include seizure or freezing of assets before the final judgment to ensure they are available whenever the dues are to be collected.

"The measures empower countries to freeze assets and repatriate. So, we can collect information and ask for action. The government has already sought some action in a few cases," said a finance ministry official.

The Organisation for Economic Cooperation and Development has mentioned conservancy measures in its "Model Tax Convention on Income & On Capital."

However, it says these should only be included in pacts between countries that can take conservancy measures under their laws.

Another official said the government was putting this clause in the new treaties it was signing.

"So, when we send a claim, the other country has to treat it like its own and proceed according to its domestic laws," said the official. He agreed there were problems in getting information from some countries.

The information about such undisclosed assets will be provided by Income Tax Overseas Units.

Two such units have already been set up at Indian missions in Mauritius and Singapore. Eight more are proposed to be set up in the US, the UK, the Netherlands, Japan, Cyprus, Germany, France and the UAE.

The government is under fire from opposition parties and civil society for not doing enough to bring back black money that Indians have stashed abroad.

A Bharatiya Janata Party task force has estimated that Indians have kept $500-1,400 billion abroad. A recent study by Global Financial Integrity put the figure at $462 billion.

The government says these estimates are based on unverifiable assumptions.

It has asked three economic think tanks - National Institute of Public Finance and Policy, National Council of Applied Economic Research and National Institute of Financial Management - to arrive at a reliable figure.