The government has served notices on 50 people for stashing black money abroad and evading taxes. Sources told DNA the government is proceeding against the 50 on the basis of documents received from Germany in April last year.
The Germans supplied details of money parked illegally with the LGT Bank in Liechtenstein — a tax haven — and elsewhere. The US was the first to procure such a list from Germany; it recovered more than Rs1,000 crore from tax evaders and penalised them.
India’s move comes a year after prime minister Manmohan Singh’s promise that his government would take action against black money stashers if it returns to power.
It gave an assurance when Bharatiya Janata Party leader LK Advani raised a hue and cry alleging that the Singh government had not proceeded against the guilty despite an offer being made by Germany. Advani alleged that hundreds of billions of dollars were stashed abroad by corrupt Indians, including politicians.
Officials declined to reveal their names due to a secrecy clause in the Double Taxation Avoidance Agreement (DTAA) with Germany.
However, questions are being raised on the stated reasons for the non-disclosure of names of the persons or amount involved since that treaty is with Germany. In this instance, the bank is in Liechtenstein and is not covered by any treaty.
It is learnt that the Germans had bought the information from a former employee of the bank and sold it to the US. It is still not clear whether the Indian government paid for the information because the Germans were not obliged to give it.
India has DTAAs with other countries as well, among them Mauritius. The government is in touch with the island to renegotiate the DTAA signed in 1984 and remove certain clauses.
A large number of Indians have set up companies that exist only on paper in Mauritius to launder money to fund businesses in India. They take advantage of the island not having any capital gain tax provision.
Officials say the regular inflow of money into Indian share markets from Mauritius has been a matter of concern, more so because Mauritian authorities block efforts to reveal the names of the companies or individuals because of the secrecy clause in the DTAA.
More than 15% of the money pumped in the share market is routed through Mauritius and a large chunk of FDI and FII investments come through the same route.
Other tax havens harbouring such activities are the Cayman Islands and the Isle of Man.
India has written to nine other tax havens for divulging information on tax evaders. The havens include Bermuda, the British Virgin Islands, Gibraltar, Macau, Bahrain, Seychelles and Congo. India has also notified Hong Kong, which is administered by China, for entering into a DTAA as increasing amounts of money are routed to India from there.
