The issue of hide and seek among the Taxation Authority of India and its residents has finally come to an end with the revised version of taxation treaty between the two countries, India and Switzerland. An amendment was carried out in the treaty which enabled the Taxation Authority of India to exchange and access information of the residents who had there account with the Swiss banks. The revised version of the treaty has made it very big change in the taxation system has it is expected that tax evasion will come down to a very minor level after this step by the Taxation Authority of India. The treaty has not been mush highlighted and has merely been considered as a revised version of existing Double Tax Avoidance Version Agreement. The same treaty has been signed by the representative of both the countries which included the Swiss Foreign Minister, Michelins Calmy-Rey, from the side of Switzerland and Mr. Pranab Mukherjee from the side of India. The agreement was revised in New Delhi, the capital of India.
The idea was not to publish his incident on a large scale basis by both the sides, which resulted as a willing avoidance to the queries of media. Although a piece of information was received that the Switzerland Government and banks have persevered that the exchange information as per the norms and regulation established by the OECD can only be complied with after the revised version of the treaty has been signed. The prime motive behind such an agreement was to stop the compilation of black money and tax avoidance in India. India’s loss through the black money is almost double the taxation it collects in a year and hence most of the obligations of the country are left unfulfilled.
Mr. Pranab Mukherjee had to say the following in such regard, “A protocol amending the existing Double Taxation Avoidance Agreement was signed here today between Republic of India and Swiss Federal Council.” Added to it, it has been observed Switzerland is also entering into bilateral treaties among various other nations in order to curb the evasion of tax and black money. In respect of all the countries that have been attached to bilateral treaties, they would have the right to access the accounts of the respective residents with some basic restricted conditions. The India and Switzerland treaty has also brought the two nations in the clause of Most Favored Nation (MFN) and both shall not discriminate among each other.
The treaty has also provisions for dividend, interest, royalties and payments for technical services which provide that among the prevailing rates of the countries, the lowest prevailing rate shall be the withholding tax that India continues to prevail with another OECD nation, which indicates that, in the present case, it will be effective for Switzerland. The provision for shipping companies operating internationally has been incorporated as in future; the shipping companies will now have to pay their taxes on the profits in the domicile country.
Thus, the treaty has a plenty to offer and seems to be promising in its initial stages.