Black money: Information leaks delay data flow

NEW DELHI: Just when the tax department has started getting information on Indians with foreign bank accounts, it has to deal with several ingenious ways being adopted by evaders to delay data flow. Seeking information under double taxation avoidance treaties is proving to be difficult for the country's tax authorities in some cases where a handful of those under investigation are deliberately leaking information to delay the probe.

Once details of India tax authorities seeking information from a tax jurisdiction are leaked, it prompts the particular country to go slow on providing information, citing breach of treaty clauses and privacy issues.

The tax department has now devised a strategy under which they are planning to plug this gap to fast-track the flow of information. Double Taxation Avoidance Agreement (DTAA) treaties come with confidentiality clauses that prevent countries to make information public.

"There have been instances where information is being leaked just to ensure that entire process is delayed. We have seen this in a number of cases and we are keeping a close watch on this," said a tax official, who did not wish to be identified.

The tax authorities are keen to ensure that delays to information flow through such means are plugged and have entered into intense dialogue with their counterparts to convince them about the steps being taken by the government to preserve the sanctity of the treaty clauses.

The Modi government has launched a major offensive against black money and has been pressing for information from several tax jurisdictions. India joined the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Information (AEOI), a major boost in its drive against black money and tax evasion.

In recent examples, Germany had protested the breach of confidentiality clause after the names of Indian account holders were revealed. The argument was that information obtained through the DTAA treaties should not be made public as it amounts to violation of treaty clause. The UK had also lodged a similar protest.