The absence of criminal legal treaties between India and tax haven nations have been cited by probe agencies working in the SIT on black money as one of the major impediments in initiating steps to bring back illegal funds stashed abroad by Indians.
These agencies, including the Central Board of Direct Taxes (CBDT), CBI and the Enforcement Directorate, have made these challenges known to the SIT in a report after which the high-powered panel has begun preparing an action plan to be communicated to the government for action in this regard, official sources said.
The report, accessed by PTI, says at present India has 37 Mutual Legal Assistance Treaties or Multilateral Assistance Treaties with about 37 countries which does not include "many of the tax havens like Cayman Islands, Guernsey, Lichtenstein,
Monaco, Bermuda, Malta, British Virgin Islands and others" where a number of suspect black money probes are being conducted by Indian investigative agencies.
"The Special Investigation Team on black money is expected to soon send a report to the government in this regard with a request to ink MLATs with tax haven nations and all other jurisdictions important from the point of financial and tax evasion investigations," sources privy to the development said.
To impress upon the difficulty faced by agencies the report cited two incidents of last year, where tax sleuths were not able to "attach and recover the money in foreign bank
accounts in the UK and Singapore through the Ministry of Home Affairs and CBI" as the existing treaties like Double Taxation Avoidance Agreement (DTAA), Tax Information Exchange Treaty (TIEA) and those framed by global economic body OECD were not helpful.
These treaties, sources said, provide for only collection of documents and does help in attachment or restraint of funds or assets of a suspect black money holder to India.
"Thus, in a number of black money cases the Indian agencies are not being able to recover or repatriate these funds lying in foreign countries or bank accounts abroad for recovery of tax demands under domestic laws," they said.
