Stepping up its fight against black money generation, the government today approved signing and ratification of an agreement between India and Seychelles for exchange of information on taxes.



The agreement will stimulate information exchange between India and Seychelles for tax purposes, which will help curb tax evasion and avoidance, Communications and Information Technology Minister Ravi Shankar Prasad said after the Cabinet meeting chaired by Prime Minister Narendra Modi here.



"This is part of the ongoing initiative of the government of India to unearth black money," he said.



In this regard, he said the government has taken various initiatives, including signing of FATCA (Foreign Account Tax Compliance Act) with the USA and enactment of black money law.



"After America, we are also planning to sign such agreements with other countries," he said.



He also said the G-20 agreement to share real-time exchange of information by 2017 has been an outcome of the initiative of Prime Minister Narendra Modi.



Elaborating on the agreement with Seychelles, Prasad said "any abuse of land of India or Seychelles for money transaction in an unauthorized manner regardless of the fact that he is resident or not is amenable to prosecution".



All types of taxes imposed by India or Seychelles irrespective of the manner in which they are levied are covered, the minister said.



The agreement will enable competent authorities of India and Seychelles to provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of domestic laws of the two countries concerning taxes.



Information received under the agreement shall be treated as confidential and may be disclosed only to persons or authorities concerned with assessment, collection, enforcement, prosecution or determination of appeals in relation to taxes covered under the agreement, he said.



Information may be disclosed to any other person or entity with prior written consent of the country sending such information.



The agreement also provides for a Mutual Agreement Procedure to resolve any procedural differences.



As such, he said, the agreement does not have any financial implications.



"Only in the event of extraordinary costs exceeding USD 500, the government of India will bear the same, as per Article 9 of the agreement. India has similar provisions in other such tax information exchange agreements," he said.



India has put in place similar bilateral agreements for Exchange of Tax Information with Argentina, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macao, Monaco and San Marino.



The central government is authorised under Section 90 of the Income Tax Act, 1961, to enter into an agreement with a foreign country or specified territory for exchange of information for prevention of evasion or avoidance of income tax chargeable under the Act.



Negotiations to this effect were held in Seychelles on June 8-9 this year.



Consequently, India and Seychelles have agreed on the text of the agreement.