AEOI Current Affairs - 2020

CBDT inaugurates Web Portal for exchange of information on Income Tax

Central Board of Direct Taxes (CBDT) has inaugurated the Web Portal for Exchange of Information on Income Tax which will consolidate all relevant Automatic Exchange of Information (AEOI) related information at one place. This portal will help in convenient access by public, financial institutions as well as departmental officers at large.

Web Portal for Exchange of Information on Income Tax

The Web Portal would be a repository of policy and technical circulars, guidance, notifications issued by the CBDT. It would provide links to relevant circulars, guidance issued by regulatory authorities in India and other international bodies.

The portal would not only be useful for domestic financial institutions but will also help foreign financial institutions as well as tax authorities to get information about Indian laws, rules and procedures related to AEOI under Common Reporting Standard (CRS).

Background

To implement the AEOI standard, necessary domestic legal framework was put in place in 2015. Later, on August 2015 a comprehensive Guidance Note was released for providing guidance to financial institutions, sectoral regulators as well as Income Tax (IT) Department officers for ensuring compliance with reporting requirements under IT Act and Rules. Under the Common Reporting Standard (CRS) on Automatic Exchange of Information (AEOI), India is committed to exchange financial account information automatically from 2017. Also, financial institutions annually reports information which are then exchanged by India under the standard.

Sectoral regulators have issued necessary notifications and circulars for compliance by financial institutions. To educate financial institutions about their reporting obligations, CBDT also carries out stakeholder consultations. Moreover, to reach out to financial institutions and account holders, CBDT has also created an Exchange of Information portal on Income-tax Department website for dissemination of information to all stakeholders.

India gets first tranche of Swiss account details

Under the new Automatic Information Exchange pact, India received its first tranche of Swiss Bank Account details. India hence is legally one among 75 countries with which the Switzerland Federal Tax Administration (SFTA) has exchanged information. The next exchange of information will take place in September 2020. This is because according to international agreement, the information exchange has to happen within nine months after the end of the calendar year. By which the next information exchange will take place by September 2020.

The SFTA said that it collected information from around 7,500 institutions. It has the largest exchange program with Germany of all other countries.

Automatic Information Exchange Pact

The pact was a major milestone in Indian Government’s fight against black money. The pact came into existence in 2017. The Swiss banks through the pact agreed to exchange information with countries abroad. The objective of the pact is to make tax evasion possible. The member countries OECD, G20 and other important financial centers were committed to implement the pact.

Working

According to the pact, the Swiss bank shares the information of the accounts to the domestic tax officials. They then share the information to the pact’s partner country.

Significance of the pact

The data received will help India establishing strong prosecuting cases against those who have unaccounted wealth. There are minimum of 100 cases that were closed before 2018 for which Swiss will now share details with India.

Concerns

It is believed that many Indians have closed their accounts after Swiss Government adopted the law due to international pressure. The details that are to be collected from Swiss Government includes mostly of business men who have now settled in South – East Asian, African, UK and other South American countries.