India has signed a global treaty which will enable it to access data related to bank accounts from across the world, including tax havens that were earlier refusing to cooperate.
While information under the agreement finalized at the OECD will start flowing in from 2017, the government is also ready to sign Foreign Account Tax Compliance Act (FATCA) with the US, which will be effective from September 2015 and is expected to result in additional data flow.
Both the agreements had to be signed in 2014 but the government had to drop its plans at the last minute in the wake of a Supreme Court observation related to confidentiality clause in the treaties as well as the double taxation avoidance agreements. But with the legal hurdle out of the way, the Cabinet endorsed the two pacts.
India has been at the forefront of the efforts at OECD to get countries to share of all bank information with tax authorities on an annual basis. Currently, countries can seek information from others but the new mechanism will allow automatic exchange of information on an annual basis, which will include the account balance and all income.