India has joined the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information (AEOI).
The new global standards has wide in scope and oblige the treaty partners to exchange wide range of financial information from institutions from their country.
In order to implement these standards in India necessary legislative changes will be made in section 285BA of the Income Tax Act, 1961.
Apart from India 5 other nations including Australia, Canada, Costa Rica, Indonesia and New Zealand also have joined it. Now the total number of countries agreeing to exchange information automatically in accordance with MCAA has gone up to 60.
Implications
- When fully implemented, these standards will enable India to receive information from almost every country in the world including offshore financial centres. Thus, it will help to prevent international tax evasion and avoidance.
- It will be also instrumental in getting information about assets of Indians held abroad and their beneficial owners.
- Thus, it will directly help the Government to curb tax evasion and deal with the menace of black money stashed abroad.