Even as the government is facing flak from various quarters for its inability to check corruption and as social activist Anna Hazare is on fast to ensure enactment of an effective Lok Pal Bill, India will have to wait till year-end to get information on illicit funds stashed away in banks in Switzerland.
For, the parliamentary approval process in Switzerland will need time till almost the end of this year to have the new tax treaty in force by January 2012, although the revised Double Taxation Avoidance Agreement (DTAA) between the two countries was signed in August 2010.
So concerned is the government over corruption and black money that matters on enactment of the new DTAA were the first question put to Johann N. Schneider-Ammann, Head of the Federal Department of Economic Affairs in Switzerland, when he called on Finance Minister Pranab Mukherjee here on Thursday.
In an exclusive conversation with The Hindu after the meeting, Mr. Schneider-Ammann said: “I confirm to you that this was almost his first question. My answer was that the process is actually in the parliamentary process. It is going to the second chamber in June, after which we do have to wait for a 100-day referendum period for the people to give their views on the issue [as in a vote] and that will complete the process before the end of this year, some time in November or December. Once this is done, it will come immediately into force, by about January 2012.”
Mr. Schneider-Ammann pointed out that provisions in the new agreement would enable flow of information on request in cases of tax frauds and evasion as well.
However, no “fishing” expedition would be permitted. It means that when any information is sought, the Indian government will have to be specific about the name of the person being investigated as well as the Swiss bank involved. “There is no fishing expedition allowed today and no fishing expedition will be allowed in the future as well,” he said.
Noting that he had “very good” discussions with Mr. Mukherjee on financial issues also in general, Mr. Schneider-Ammann said the new agreement would help in enhancing partnership between the two countries and resolve black money issues. “We do want to solve issues around black money. I can tell you Switzerland is very much interested ... we respect all the OECD [Organisation for Economic Cooperation and Development] prime conditions,” he said.
At the meeting, according to a Finance Ministry statement, the Swiss Minister pointed to the need for further opening up the insurance and banking sectors in India to encourage Swiss investment.
Responding, Mr. Mukherjee said opening up the insurance sector was part of the government's agenda to bring about major financial reforms. As for opening up the banking sector, the Reserve Bank of India was preparing guidelines for foreign banks to open branches in the country and the process was in an advanced stage.