Mumbai: India has offered amnesty to more than 100 wealthy citizens who evaded taxes by hiding funds in accounts in HSBC Holdings Plc’s Swiss unit, according to a government official with knowledge of the matter.
The income-tax (I-T) department has agreed not to start criminal proceedings or levy a penalty if the Indians repatriate the money from Geneva and pay the taxes, the official said, asking not to be identified because the information is confidential. The official declined to name anyone on the list.
India joins countries, including the UK and the US, in cracking down on rich people who haven’t disclosed offshore funds amid probes into money laundering and tax evasion. A British millionaire was convicted this month for hiding money in HSBC’s Swiss bank in the first case to come before a London court based on data that the UK obtained from France in 2010.
The amnesty offer in India is being made to some people who were on a list of 700 citizens with HSBC accounts in Geneva that was given to India by French authorities last year, the official said, without providing details. The government is still investigating other people on that list, the person said.
The Central Board of Direct Taxes (CBDT) was asked to probe whether the 700 account holders had evaded taxes, India’s Sunday Express reported on 7 August, citing finance ministry officials that it didn’t name. The names of HSBC clients won’t be disclosed until the I-T department begins prosecuting them, The Economic Times newspaper reported on 22 November, citing finance secretary R.S. Gujral.
Anuja Sarangi, a spokeswoman at CBDT, didn’t return three phone calls or respond to three emails seeking comment on Monday. Laxman Das, chairman of CBDT, also didn’t respond to an email. Rajesh Joshi, an HSBC spokesman in Mumbai, declined to comment.
“As a general principle, we do not comment on whether individuals are our clients or provide the number of clients of a particular nationality,” Medard Schoenmaeckers, a Zurich-based spokesman for HSBC’s private bank, said by phone.
France obtained data on accounts held at HSBC in Geneva after a bank employee, Herve Falciani, stole information connected to at least 24,000 current and former clients, the London-based lender said in March 2010. Authorities in countries, including Italy and the UK, have since begun investigating whether those clients included people who were evading taxes or involved in money laundering.
At the time of the data theft more than five years ago by Falciani, HSBC’s Swiss private bank had no more than 1,500 clients in any one country, a Geneva-based official who declined to be named in line with company policy said in May.
In the US, a Wisconsin neurosurgeon was reindicted in September by a US grand jury on new charges that he failed to declare an HSBC account in India valued in 2009 at $8.7 million.
India loses Rs 14 trillion from tax evasion every year, Arun Kumar, author of The Black Economy in India, said in July 2011. Based on those estimates, a successful crackdown could more than double the nation’s tax revenue, which collected about Rs 9.3 trillion for the year ended 31 March, according to most recent budget proposal.
The Supreme Court in July 2011 ordered a team headed by a judge to take over the government’s efforts to retrieve as much as $500 billion that Indians may have stashed illegally overseas, citing in a 53-page ruling a case where records were found of assets being held by a Swiss bank in Zurich.
HSBC’s Swiss private bank in September 2008 asked clients and independent money managers to surrender their rights to banking secrecy protection. In countries, including India, where rules demand investor disclosure, HSBC sought permission to hand over the names of clients that want to keep their overseas investments, the bank said in a letter emailed to Bloomberg in July 2009.
The value of illicit Indian assets held abroad was about $462 billion, according to a November 2010 report from Global Financial Integrity, a Washington-based research firm.
Giles Broom in Geneva contributed to this story.