Finance Minister Pranab Mukherjee on Tuesday announced the government's intention to amend the Double Taxation Avoidance Agreements (DTAA) with various governments and tax havens to deal with the menace of black money stashed away abroad.
Talking to reporters on the sidelines of the 27th Annual Conference of Chief Commissioners and Director-Generals of Income Tax Department at Vigyan Bhavan here, Mr. Mukherjee said a clause would be inserted on information sharing regarding the banking sector and entering into Tax Information Exchange Agreements (TIEA) with several countries, including tax havens.
He said: “The DTAA and TIEA are two important instruments which will help the income tax department tackle black money stashed outside the country. We will be able to impose tax on them.”
DTAAs have been amended with 40 nations and the TIEA has been sealed with tax havens like the Isle of Man, Bermuda and Bahamas. In the absence of a clause on the banking sector, the contracting countries have not been sharing information in this regard.
Mr. Mukherjee said that with the strengthening of the transfer pricing mechanism, the government had been able to prevent an outflow of Rs. 33,000 crore.
“We have strengthened our transfer pricing mechanism through which we are preventing the transfer of fund through various dubious practices. Till now Rs. 33,000 crore has been detected, which otherwise would have gone out of the country.” Earlier, addressing senior officers of the Income Tax (IT) department after inaugurating the conference, Mr. Mukherjee said the Direct Tax Code Bill was under the examination of Parliament Standing Committee and would be made effective from April 1, 2012. Therefore, the Department should prepare for transition from the Income Tax Act 1961 to the Direct Tax Code Bill regime.
The Finance Minister said that it would include various issues like redrawing of business processes, rules, forms, training needs of manpower and the necessary infrastructure. This task should be completed in a mission mode to avoid any inconvenience to tax-payers and to maintain continuity in revenue buoyancy, he added.
The conference was attended by S.S. Palanimanickam, Minister of State (Finance); Namo Narain Meena, Minister of State (Finance); Sushma Nath, Finance and Expenditure Secretary, Sunil Mitra, Revenue Secretary; Sudhir Chandra, Chairman, Central Board of Direct Taxes (CBDT); and Members of the CBDT.
