50 get notices for parking black money abroad

It’s official. The government has served notices to nearly 50 people for stashing black money in German banks and evading tax.

After DNA first reported issuance of the notices on Thursday, an official in the Central Board of Direct Taxes (CBDT) confirmed to the media that such notices had been indeed served, based on information received from German authorities.

The official, however, did not reveal the exact number of people who have been served notices, their names or the quantum of black money in foreign banks due to a secrecy clause in the double taxation avoidance agreement (DTAA) with Germany.

But questions are being raised because one of the banks mentioned by the Germans is in Liechtenstein (a German-speaking alpine microstate in West Europe) and is not covered by any treaty.

The German government had sent a list of Indian tax evaders two months ago. The list had people who have stashed black money in Liechtenstein’s LGT Bank and other tax havens, following which the Indian government issued the notices. Retrieving tax, however, may take some time.

Meanwhile, New Delhi is engaged in a dialogue with Switzerland for getting information on illegal funds parked by Indians in Swiss banks.

Switzerland had shared information with the US on more than 4,000 people with account in its banks, after which it recovered more than Rs1,000 crore from tax evaders and penalised them.

India is seeking similar details. New Delhi has sought such information from nine other tax havens as well. They include Bermuda, the British Virgin Islands, Gibraltar, Macau, Bahrain, Seychelles and Congo. It has also notified Hong Kong, which is administered by China, for entering into a DTAA as large amounts of money are routed to India from there.

The notices are being seen as a turning point in the government effort to clamp down on black money.

After BJP leader LK Advani pointed out that the Manmohan Singh regime had not taken action against “corrupt Indians” stashing black money in foreign banks, the UPA government had listed tracking down black money on foreign shores as a priority.

Singh had, after returning to power in July 2009, said the government had initiated action to get black money belonging to Indians from Swiss banks. Finance minister Pranab Mukherjee said in parliament the government had concluded tax treaty negotiations with Switzerland.