PremiumNew Delhi: The finance ministry said on Saturday that India and Switzerland share information every year about financial accounts of citizens, and that there is no major chance of an increase in black money flow to Swiss banks.
The ministry said any increase in deposits in Swiss banks by Indians could be due to higher deposits by Indian companies in Switzerland amid rise in business transactions and increase in deposits owing to the business of Swiss Bank branches located in India. An increase in interbank transactions between Swiss and Indian banks, a capital increase for a subsidiary of a Swiss company in India and rising liabilities connected with the outstanding derivative financial instruments could also be the reason for the increase in deposits.
India and Switzerland exchange information about financial accounts in each country held by people of the other country from 2018 onwards. “In view of the existing legal arrangement for exchange of information of financial accounts (which has a significant deterrent effect on tax evasion through undisclosed assets abroad), there does not appear to be any significant possibility of the increase of deposits in the Swiss banks which is out of undeclared incomes of Indian residents," the ministry said in a statement.
The ministry’s clarification is meant to drive home the point that a mere increase in financial asset holding in Swiss banks alone is not sufficient to interpret it as the flow of tax evaded funds from India to Swiss banks. The explanation comes after media cited annual data from Switzerland's central bank and reported that funds parked by Indian individuals and firms in Swiss banks, including through India-based branches and other financial institutions, jumped to 2.55 billion Swiss francs or over ₹20,700 crore in 2020.
The ministry said the Swiss authorities have been requested to provide the relevant facts along with their view on possible reasons for the increase or decrease in the assets held in the light of the media reports.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!