Government approves pact between India and Seychelles to curb black money

With an intention of curbing black money generation the government approved signing and ratification of the Tax information exchange agreements between India and Seychelles.
According to the agreement both the nations will exchange information with each other regarding taxes so as to curb tax evasion and avoidance by its citizens.
As per the agreement the information provided by each nation will be treated as confidential and may be disclosed only to persons or concern authorities (Judiciary) who in relation to taxes covered under the agreement.
Implications:
Due to this agreement the competent authorities of both the countries will get relevant information for administration and enforcement of the domestic laws of two countries concerning taxes.
Background:
Prime Minister Narendra Modi visited Seychelles as part of three-nation tour for cementing strategic partnership with island countries of Seychelles, Mauritius and Sri Lanka in March 2015. On his visit he had inked various agreements – relating setting up joint working group to promote ocean based economy, free visa on arrival (VoA) and free visas for three months.  Four MoUs were signed in fields of renewable energy, hydro graphic survey, electronics navigation and infrastructure development at the island of Seychelles.

Government Measures to curb Black Money:

• The Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, 2015 was passed by the parliament in May 2015. It makes people mandatory to disclose their foreign income and assets and pay 30 per cent of it as tax and if fail to pay in given time limit then extra 90 per cent is levied.
• India and United States have signed inter-governmental agreement to implement the Foreign Account Tax Compliance Act (FATCA) under which both the nations exchange a wide range of financial information among themselves automatically and periodically.
• In June 2015, India has joined the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information (AEOI) which includes Australia, Canada, Costa Rica, Indonesia and New Zealand.

Month: Current Affairs - August, 2015