India must be mindful of its reputation for tax terror in hunt for Swiss stash

livemint.com:

Mint has reported about the fifth round of this exchange of information, with Switzerland sharing the details of nearly 36 lakh financial accounts with 104 countries. Funds parked by Indian citizens and companies in Swiss banks, including through India-based branches and other financial institutions, are reported to have declined by 11% in 2022 to 3.42 billion Swiss francs (nearly ₹30,000 crore) from 3.83 billion Swiss francs in 2021, according to data from Switzerland’s central bank in June. This was largely due to a steep drop in customer deposits.

While consistent sharing of information in compliance with the pact is welcome, it's important to remember that past transgressors though cannot be brought to book under the revised tax treaty signed by the two countries. How will Indian tax authorities use this mine of information to hunt down income that evades tax? That is the real challenge. The maturity of the Indian tax authorities is going to be tested at a time when India's reputation has taken a beating for rising tax terrorism.

Indian officials are reported to have said that the new details shared with them pertain to "hundreds of financial accounts", including many cases in which multiple accounts are associated with individuals, corporations and trusts. They added that the data will be used extensively in probes of suspected tax evasion and other wrongdoing, including money-laundering and terror funding. The amount involved in the exchanged information and other specifics are not in the public domain.

Any presumption that all Swiss accounts are illegitimate is not correct. Individuals and corporations could well hold deposits for investments or pending payments. Deposits could also be held by those who do not