India seeks Germany`s nod to share black money info with ED

India has asked Germany to allow it to share information on black money, allegedly stashed by 18 Indians in LGT Bank, with the Enforcement Directorate that investigates violations of foreign exchange norms.

Updated: Aug 10, 2010, 18:28 PM IST

New Delhi: India has asked Germany to allow
it to share information on black money, allegedly stashed by
18 Indians in LGT Bank, with the Enforcement Directorate that
investigates violations of foreign exchange norms.

Germany had helped India last year in unearthing Rs 44
crore in untaxed money, stashed by these 18 Indians, in LGT
Bank in the European tax haven of Liechtenstein.
Penalty proceedings were initiated against these people
and a total tax demand of Rs 24 crore has been raised against
them. However, India needs Germany`s clearance to further
share the information provided by that country, with the
Directorate of Enforcement (ED).

"Indian competent authority under the DTAA has requested
the German competent authority to allow it to share the
information with Indian Directorate of Enforcement ... The
matter is under consideration of German competent authority,"
Finance Minister Pranab Mukherjee said in the Rajya Sabha
today.

He said the article concerning `exchange of information`
of Double Taxation Avoidance Agreement (DTAA) with Germany
does not provide for sharing of information with ED.

India is already in talks with many countries to revise
the DTAAs to prevent tax evasion and strengthen `exchange of
information` norms.

"India has taken steps to re-negotiate all existing DTAAs
to revise article concerning Exchange of Information to
specifically provide for exchange of banking information,"
Minister of State for Finance S S Palanimanickam said in a
written reply to the Rajya Sabha.
Responding to a query on flow of illegitimate funds in
the country, he said the government has proposed to review the
India-Mauritius DTAA to prevent treaty shopping and strengthen
information exchange.

Treaty shopping refer to a deal where a third country
resident takes advantage of the provisions of the DTAA between
two countries to reduce his tax liability.

Palanimanickam said a joint working group comprising
members from the governments of India and Mauritius has had
six round of meetings since it was constituted in 2006 to put
in place adequate safeguards to prevent misuse of the DTAA.

"Consistent efforts are being made by the Indian
government to find mutually acceptable solutions for
addressing India`s concerns," he said.

Further, though India does not have a DTAA with another
tax haven Cayman Islands in the Caribbean, it has taken steps
to conclude a Tax Information Exchange Agreement with it.

PTI