Blackmoney | Pact with Saarc to come into effect from April

Blackmoney | Pact with Saarc to come into effect from April

New Delhi: Taking forward its efforts to track and unearth blackmoney, India has now ratified its Double Taxation Avoidance Agreements (DTAA) with Saarc nations and the revised treaties will come into effect from next fiscal.

The tax agreement, amongst Saarc countries—Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka and India—was ratified by the Saarc secretariat last April.

“The central government hereby directs that all the provisions of the said agreement shall be given effect to in the Union of India with effect from 1st day of April, 2011," the official government Gazette notification said.

According to the notification, the new agreement will apply to persons who are residents of one or more member states.

The tax information exchange treaties amongst the South Asian Association For Regional Cooperation (Saarc) nations was struck first at Dhaka in 2005.

Members of Saarc bloc include Bangladesh, Maldives, Bhutan, Nepal, India, Afghanistan, Pakistan and Sri Lanka.

On formalisation, this SAARC limited multilateral agreement on avoidance of double taxation and mutual administrative assistance in tax matters shall be applicable only in the member states where an adequate Direct Tax structure is in place.

“Further, in case of a member state where such a structure is not in place, this agreement shall become effective from the date on which such a member state introduces a proper Direct Tax structure and notifies the SAARC secretariat to this effect," the Gazette notification added.

At present, India is in the process of negotiating Double Taxation Avoidance Agreements (DTAAs) with 65 countries.

This is to broaden the scope of article concerning Exchange of Information, specifically regarding banking and taxpayers not covered by the said exchange treaty.

Finance minister Pranab Mukherjee had recently spelled out new initiatives by the government to check and curb blackmoney in the country.