India may have to wait till at least next year for information from Switzerland on the possible black money trail to Swiss banks, as a treaty for the same might come into force only by the end of 2011.
The treaty needs to be ratified by various authorities in India and Switzerland, including the Parliament of the European nation, and it might come into effect by 2011-end depending on these approvals, a spokesperson of Switzerland's Federal Department of Finance told PTI.
If ratified by 2011-end, the provisions of the treaty, which includes information exchange about suspected tax evaders and other financial offenders, would come into effect in India from the fiscal year beginning on or after the first day of April 2012, the official said.
This means that India would be able to seek information for fiscal year 2012-13 onwards and not for the past periods, experts said here. Still, it is unlikely that the names of Indians having money in Swiss banks would be made public, as being demanded by the Opposition parties, because such a step would not only be in breach of the bilateral treaty, but could also hinder the process of investigations, they added. In Switzerland, the provisions would come into effect on the fiscal year beginning on or after January 1 following the treaty coming into force, the Swiss official said.
The Indian government is facing intense pressure from the Opposition parties, and the Supreme Court, on the issue of black money allegedly stashed away by some Indians in Swiss banks and other tax havens. It has become a political hot potato, amid reports of Indians having parked billions of dollars in these banks. But, there are no official figures as such and experts believe that it was not necessary that all the funds deposited by Indians in Swiss banks were ill-gotten.
Finance Minister Pranab Mukherjee and Swiss Federal Councillor Micheline Calmy-Rey signed a “protocol” on August 30, 2010 to amend the double taxation agreement (DTA). The revised tax treaty is expected to facilitate the Indian government in getting details about illicit wealth kept in Swiss banks.
Asked about the status of the treaty, the Swiss official said that one of the Parliament commissions in charge of the DTAs decided to approve the DTA with India and the approval process was expected to end by September 2011.
“So, the plenum of the lower chamber of Parliament will soon decide on it. Three months later, the higher chamber will take a decision. Probably, by the end of summer 2011, the DTA with India will be approved by the Swiss institutions,” the official said.
If the DTA comes into force by 2011-end, the official said, “its provisions shall have effect in India, in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Amending Protocol entered into force.”
On the other hand, the provisions will become effective in Switzerland, in respect of income arising in any fiscal year beginning on or after the first day of January next following the calendar year in which the protocol enters into force.
As per the initial agreement , the information exchange was expected to take effect on January 1.
“This Protocol has not entered into force yet, since the governments of the Contracting States have not notified each other through diplomatic channels that all legal requirements and procedures for giving effect to the Amending Protocol have been satisfied,” the official had earlier said.