Immediate appropriate action is taken by the Directorate of Enforcement under the Foreign Exchange Management Act, 1999, whenever any specific case of unauthorized maintenance of foreign bank account or retention of funds in foreign banks by any person resident in India comes to its notice.

India has taken steps to re-negotiate all existing Double Taxation Avoidance Agreements (DTAAs) to revise Article concerning Exchange of Information to specifically provide for exchange of banking information, if in case such a provision does not exist in the existing Article.

Government has proposed to review the India-Mauritius Double Taxation Avoidance Convention (DTAC) to incorporate appropriate changes in the DTAC for prevention of treaty shopping and to strengthen the mechanism for exchange of information on tax matter between India and Mauritius.  For this purpose a Joint Working Group (JWG) comprising members from the Government of India and the Government of Mauritius was constituted in 2006 to inter-alia put in place adequate safeguards to prevent misuse of the India-Mauritius DTAC.  Since then, JWG has had six rounds of meetings.  Consistent efforts are being made by the Indian Government to find mutually acceptable solutions for addressing India's concerns.

India does not have a DTAA with Cayman Islands.  India has taken steps to conclude a Tax Information Exchange Agreement (TIEA) in line with international standards, with Cayman Islands as India does not want to enter into DTAA with Cayman Islands.

This information was given by the Minister of State for Finance, Shri S.S. Palanimanickam in a written reply to an Unstarred Question raised in Rajya Sabha today.

Exchange of banking information expanded in renegotiated tax treaties; enforcement action for unauthorized foreign accounts. Immediate enforcement under the Foreign Exchange Management Act addresses unauthorized foreign bank accounts and retention of funds abroad; the Government is renegotiating existing Double Taxation Avoidance Agreements to strengthen Exchange of Information provisions to permit banking information exchange. The India-Mauritius convention is being reviewed to prevent treaty shopping via safeguards developed by a Joint Working Group, and India seeks Tax Information Exchange Agreements with jurisdictions like the Cayman Islands instead of DTAAs to align with international standards.