Swiss banks that became equivalent with black money in India will no longer be an option for those look to launder their black money. The bank was always on the target for safeguarding those Indians who kept their black money there, in order to escape from payment of tax. So far, India had to ask Switzerland for specific kind of information by providing a valid inquiry was against the account holder.
In a move targeting to fight against black money stashed abroad, India signed an agreement with Switzerland that will allow automatic sharing of tax-related information from coming year, i.e; 1st January 2018. The AEOI assures to a norm set by the global economic body the Organisation for Economic Co-operation and Development (OECD) for tax transparency. Privacy and data protection requirements are to be strictly followed under the automatic information exchange framework.
This process makes sure the signatory always maintains control over its exchange partners and the treatment of the data exchanged, as per OECD. The automatic exchange of information will frighten Indians from hiding black money in Swiss banks. And the results are seen as the Indian currency in Swiss banks has been decreasing already. The Indian currency deposited in Swiss banks stood at a record high of 6.5 billion francs (Rs 23,000 crore) by 2006-end.
India was at the 61st place in 2015, while it used to be among top-50 nations in terms of holdings in Swiss banks till 2007. In 2004, it was ranked highest at 37th place. Such brisk decline in Indian deposits in Swiss banks leaves the Indian government with less chance of making huge catches. Now that the account holders know their faces will be unmasked, the decline in deposits will only fasten.
In its combat on black money, India has also signed treaties with Singapore, Mauritius and Cyprus to prevent round-tripping of funds.
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