India in talks with Switzerland to bring home tax on undeclared money

After sealing a double taxation avoidance pact with Switzerland, India is now negotiating with the Alpine nation for an arrangement to obtain tax on undeclared money parked in Swiss banks. Under the agreement, the identity of the citizens would not be disclosed. However, the arrangement is likely to be different from the one entered into by Switzerland with the UK and Germany. Switzerland had earlier drawn up treaties with Germany and the UK that entails turning in tax from undeclared assets which the citizens of the nations keep in its secretive banks. In fact, Greece was also reportedly working on a similar arrangement with Switzerland. India is also keen to seal a similar deal but with different terms and conditions. As per the current contours of the agreement, tax is collected by Switzerland on the interest earned by citizens on the deposits. In return, Switzerland asks for market access for its financial institutions and a resolution of the problem ofpurchasing illegally acquired tax data. However, given the fact that the interest paid by Swiss banks is very low, the amount generated in form of tax is inconsequential. The average interest rate in Switzerland, decided by the Swiss National Bank, was 1.52 per cent from 2000 until 2010. India, therefore, wants that the tax collected by Switzerland should be on the deposits and not just the interest earned. Further, India can't provide greater access as demanded because it is already in negotiations with the European Union for a free trade agreement and till its conclusion, any such decision is unlikely to be taken