SIT keeps close watch on Pandora Papers probe, tax authorities to invoke foreign black money law if required

India’s apex direct tax body has sent a directive to its officials to initiate investigations against those whose names have come up on the leaked Pandora Papers, with the Special Investigation Team (SIT) to keep a close watch on the probe. The government had directed a multi-agency probe involving the Central Board of Direct Taxes, Enforcement Directorate, Reserve Bank of India and Financial Intelligence Unit to investigate.

The Ministry of Finance had said that with a view to ensure effective investigation in these cases, the government will also proactively engage with foreign jurisdictions for obtaining information in respect of relevant taxpayers and entities. “The Government of India is also part of an Inter-Governmental Group that ensures collaboration and experience sharing to effectively address tax risks associated with such leaks.”

The government said that following earlier leaks such as HSBC, Panama Papers and Paradise Papers, it had already enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with an aim to curb black money, or undisclosed foreign assets and income by imposing suitable tax and penalty on such income.

Income tax department sources told ET that officials have been asked to approach all foreign jurisdictions expeditiously for information on accounts of those featured in the Pandora Papers. “The process of investigation has begun. Standard operating procedures are already in place,” said a tax official. “The first step is verification of the information available from all sources. Summons would be issued subsequently, seeking explanations about the money trail and financial structures, and statements will be recorded.”

Some of the names on the list, as per various reports, are non-residents and inquiries will be conducted as appropriate into their status. Letters have also been written to the foreign jurisdictions where the entities involved in transactions are located.

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The Pandora Papers is a collaborative effort of the International Consortium of International Journalists (ICIJ) that claims to have exposed the offshore financial dealings of wealthy, prominent people from over 200 countries and territories across the world.