As they continue their efforts to clamp down on the menace of black money, India and other countries will have to wait at least till 2017 before the new global standard for automatic exchange of tax information comes into effect.
India, Switzerland and 45 other nations had agreed upon automatic exchange of tax information, which is seen as a major step forward in global efforts against banking secrecy practices.
The endorsement of the 'Declaration on Automatic Exchange of Information in Tax Matters' under the aegis of think-tank OECD last week had paved the way for finalising a single global standard in this regard later this year in September.
"The effectiveness of AEOI (Automatic Exchange of Information) will come only when the standard is translated into domestic legislations and hardware in banks' IT. This means that AEOI will take place in 2017 at the earliest," Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, told PTI from Paris.Paris-based Organisation for Economic Cooperation and Development (OECD) sets the global tax standards and frames conventions against tax frauds, among others.
With respect to automatic exchange of tax information, he said things are at early stages in terms of developing the standard as well as "getting the commitments".
The new standard, expected to be finalised in September this year, provides for exchange of information on bank account balances, interests, dividends, other financial income and sales proceeds to compute possible capital gains.
By becoming part of the declaration, these countries have committed to implementing automatic exchange of tax information. The declaration also comes as a boost for India, which is making efforts to get details from Switzerland on alleged illicit funds stashed away by Indians there.
Automatic exchange of information would allow for "collecting all bank information on non-resident to pass this information on to the countries of residence of these taxpayers so that they can no longer hide money on offshore accounts," Pascal Saint-Amans said.