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Taking another step towards combating black money, India has signed a multi-lateral agreement with economic powers like France and Germany to check both tax evasion and avoidance.
The agreement, convention on mutual administrative assistance in tax matters, is a multilateral agreement of 31 other nations which "promotes international co-operation while respecting the rights of taxpayers."
The agreement has been signed under the aegis of the Organisation for Economic Cooperation and Development (OECD), a top global financial body, at its headquarters in Paris recently.
A finance ministry official said the agreement was signed by CBDT official and Joint Secretary in foreign tax division of finance ministry Sanjay K Mishra along with OECD deputy secretary general Rintaro Tamakio.
"The convention provides for administrative co-operation between the parties in the assessment and collection of taxes with a view to combating tax avoidance and evasion," an OECD statement said in this regard.
By joining the agreement, India and other 31 signatories, according to OECD, "send a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place."
"India has moved very quickly since its commitment to the convention at the November G20 ceremony in Cannes and I expect it will be the first non-OECD G20 country for which the updated convention is in force", Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration said in a statement on Thursday.
"With taxpayers increasingly operating on a global basis, tax authorities are moving from bilateral to multilateral cooperation and from exchange of information on request to other forms of co-operation. The convention is an effective and practical tool to help tax authorities in their everyday work," the statement said.
The other members under the convention are Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, United Kingdom, and the United States.