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Black money — Govt submits 627 names, 3 files and a status report to SC

NEW DELHI/BERNE: In a fresh threat to the flow of information about Indians holding accounts in foreign banks , Switzerland on Thursday said that information exchanged with India under its tax treaty can't be disclosed "in principle" to a court or any other body outside the proceedings of a "specific and relevant" case.This Swiss clarification came a day after the government was ordered by the Supreme Court to hand over all the 627 names of Indian account holders in HSBC Bank, Geneva, forcing the government to opt out from the signing of an international treaty on exchange of financial information.India's last minute withdrawal from the Multilateral Competent Authority Agreement — which provides for automatic information exchange, starting 2017 — is bound to choke the flow of vital data to tax authorities and hinder attempts to act against unaccounted funds parked in overseas accounts. India can still sign the pact. Currently, it is awaiting clarity from the court.HSBC Bank list contains no big names, no big moneyThe source pointed out that India also has to sign the Inter-Governmental Agreement with the US for automatic exchange of information, which also comes with a confidentiality clause. Officials said that in case of a delay beyond December 31, all remittances from the US will face a 30% withholding tax."For signing the agreement, the government has to give a commitment that it will follow international standards for the information received. But we could not give an assurance due to Supreme Court's interpretation of confidentiality, which is critical for all governments to exchange information," said a government official.Swiss authorities, too, are worried about sharing information and their comments come at a time when a SC-monitored Special Investigation Team is probing alleged stashing of black money by Indians aboard.Explaining the treaty provisions about disclosure of such 'secret' information, a Swiss finance ministry spokesperson told PTI from Berne that authorities from the two countries have "regular contacts on bilateral tax matters" but refused to comment on particular cases.The exchange of information on tax matters between India and Switzerland is based on the double taxation agreement (DTA) and the protocol that was signed in 2010 between the two countries. It has been in force since October 2011. "This agreement is in line with the international standards and provides for exchange of information on request," the spokesperson said."Accordingly, the information exchanged under the terms of the DTA can be provided to a court in situations where it is dealing with a specific case related to tax matters for which this information is relevant. Conversely, information cannot be disclosed in principle to a court or another body outside of such proceedings," the official added. The spokesperson, however, declined to comment on "particular cases", citing the confidentiality provisions of the Swiss-Indian DTA.There has been a heated debate here on whether the disclosure of names, without prosecution, could violate tax treaties under which these names and other details are shared by foreign countries.Replying to queries in this regard, the Swiss Federal department of finance spokesperson said the protocol to Swiss-Indian Double Taxation Agreement states that any information received "by a contracting state shall be treated as 'secret' in the same manner as information obtained under the domestic laws of that state..."The treaty further provides that any such information "shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of (information), the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes ... or the oversight of the above."The Swiss finance ministry spokesperson further said the treaty states that "such persons or authorities shall use the information 'only' for such purposes. They may disclose the information in public court proceedings or in judicial decisions".Officials in India said that all countries which have legally shared information with India have done so under treaties, which contain a confidentiality clause. "That's the way business is done internationally. We have to follow the same practice," an official said.