NEW DELHI: India has ratified an international convention on taxation which will help the country in bringing back illegal funds stashed abroad, the finance ministry said today.
India became the 13th country and the first non-OECD nation to ratify the 'Multilateral Convention on Mutual Administrative Assistance in Tax Matters', which seeks to promote transparency and exchange of tax-related information.
The Convention, a ministry release said, "also provides for assistance in the recovery of taxes. This will give a fillip to the efforts of the Government in bringing the Indian money illegally stashed abroad".
It will also allow India to seek past information in criminal tax matters.
"A Party to the Convention is compulsorily required to Exchange the past information in criminal matters for at least three years..." the release said.
The convention, it said, explicitly provides for automatic and spontaneous exchange of information and will permit tax officials to enter into the territory of the other country to examine individuals and records.
India has ratified the convention by depositing the Instruments of Ratification on February 21. Out of the 34 countries which have signed the convention, only 13 have ratified it so far.
The other countries who have ratified the convention include France, Italy, Norway, Sweden and United Kingdom. The important nations which are yet to ratify it include Australia, Germany, Japan, Russia and the US.
The information received under the Convention can also be used for other purposes besides those related to tax co- operation like countering money laundering.
The Convention was signed by Sanjay Kumar Mishra, Joint Secretary in the Ministry of Finance, in the presence of Deputy Secretary-General of OECD, Rintaro Tamaki.
This instrument, which was earlier available for the members of OECD and Council of Europe, was amended in 2010 and made open to all countries in June 2011.
It was amended in response to a call given by the G-20 Summit in 2009 for developing a broader multilateral approach to improve co-operation between the countries in the assessment and collection of taxes with a view to combating tax avoidance and evasion.
Ratification of convention by India, the release said, will encourage more countries to join the global network for exchange of tax related information and effectively deal with the menace of tax evasion and money laundering.
The Convention, it added, will "send a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place. Many more countries are expected to sign the Convention in future".
India has been spearheading the campaign for automatic sharing of tax related information at global fora including the G-20, a club of rich and developing nations.