No.402/92/2006-MC (03 of 2011)

Government ofIndia/ Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhidated the 10” February 2011

PRESS RELEASE

Indiahas entered into its third Tax Information Exchange Agreement (TIEA) with theBritish Virgin Islands. The Agreement was signed on9 February 2011by the High Commissioner of India toUnited Kingdomon behalf ofIndiaand the Deputy Premier on behalf ofBritish Virgin Islands. The agreement provides for sharing information, including exchange at banking and ownership information, and also of past information in criminal tax matters. Earlier,Indiahad signed similar TIEA’s withIsle of ManandBermuda.

In order to further reduce litigation, the Central Board of Direct Taxes (CBDT) has enhanced the limits for fling appeals against taxpayers in the Income Tax Appellate Tribunal, High Court and Supreme Court, from tax effect of Rs.2 lath, Rs.4 Iakh and Rs.l0 lath. respectively, to Rs.3 lakh, Rs.l0 Iakh and Rs.25 lakh, respectively.

In order to speed up refunds, TDS claims in all tax returns (1TR-1 to ITR-6) will be accepted without verification if the difference between the amount claimed in the return and thc amount reflected in the TDS return (AS-26 statement) does not exceed one lath rupees. This will enable the Income Tax department clear nearly 95 percent refunds without verifying each TDS claim. Cases with zero-matching, invalid TAN and difference exceeding Rs. I lakh will. However, be cleared only after due verification. This precaution is necessary to avoid refund frauds.

Earlier, the Chairman CBDT had directed all Chief Commissioners to upload necessary data so that the refunds can be issued expeditiously. It will be for the first time that most income ta refunds of the current assessment year will be dispatched to the taxpayers within the current financial year itself.

 

Tax information exchange agreement enhances cross-border cooperation; appeal filing thresholds raised and refunds processing accelerated. India signed a Tax Information Exchange Agreement with the British Virgin Islands for exchange of banking, ownership and past information in criminal tax matters. The CBDT raised appeal filing thresholds for the Income Tax Appellate Tribunal, High Court and Supreme Court to reduce litigation, and adopted a procedure to accept TDS claims without verification where the return to TDS difference does not exceed one lakh rupees, with specified exceptions requiring verification to prevent refund fraud.