A day after a Swiss central bank revealed that total deposits by Indians in Swiss banks went up 50 per cent in 2017, Union Minister Arun Jaitley in his blog post said that it can't be assumed that all deposits made in Swiss banks are 'tax-evaded' money. He said those having actual illegal money parked in Switzerland would face harsh punishments under the black money law. Under the agreement with India, he said, Switzerland would start sharing financial information about Indian accounts in January 2019.
The minister said the report has led to misinformed reaction in certain circles, which are raising questions whether the government's anti-black money steps have yielded any results. He explained that Switzerland, which ran the risk of being declared as non-complaint state, has started making disclosures with countries. "Switzerland in financial disclosures was always a reluctant state. Of late, it was subjected to a lot of international pressures, which favoured disclosures and Switzerland ran the risk of being a 'non-compliant' state by the FATF," said the minister.
Money parked by Indians in Swiss banks rose over 50 per cent to CHF 1.01 billion (Rs 7,000 crore) in 2017, reversing a three-year downward trend amid India's clampdown on suspected black money stashed there.
Jaitley said Switzerland has amended its domestic laws involving all disclosures and has entered into a treaty with India under which real-time flow of information with regard to Indians will be made. "The flow of information is starting in January 2019. Any illegal depositor knows that it is a matter of months before his name becomes public and he will be subjected to the harsh penal provisions of the Black money law in India," said the minister, adding that Switzerland has taken significant efforts to get out of the image of being a tax haven and a non-compliant state.
He said that however, it can also be assumed from the report that some people might have illegal accounts, just like during previous such disclosures like the Panama Papers.
Jaitley said the 'Indian money' outside the country can be deposited in various categories. "Past investigations by the CBDT have shown that this includes money held by persons of Indian origin who now hold foreign passport, monies belonging to Non-Resident Indians, as also monies belonging to resident Indians who have made legitimate investments abroad, including transfer of money under the liberalised remittance schemes," said Jaitley.
The minister said it is only the money kept by resident Indians outside these categories which become actionable. "The first two categories are within the jurisdiction of those countries where these persons are residents and the third category can easily be checked up in India," he said. If the deposit does not fall in any of these categories, it is per se illegal for which investigations are undertaken, arrests are made and criminal prosecutions are launched, he said.