Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: India 2010 by OECD

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									GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES



Peer Review Report
Phase 1
Legal and Regulatory Framework

INDIA
      Global Forum
    on Transparency
      and Exchange
 of Information for Tax
Purposes Peer Reviews:
       India 2010
                    PHASE 1



                   September 2010
  (reflecting the legal and regulatory framework
                   as at May 2010)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.


  Please cite this publication as:
  OECD (2010), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
  Reviews: India 2010: Phase 1, OECD Publishing.
  http://dx.doi.org/10.1787/9789264095533-en



ISBN 978-92-64-09552-6 (print)
ISBN 978-92-64-09553-3 (PDF)



Series: Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)




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                                                                                                        TABLE OF CONTENTS – 3




                                                 Table of Contents

About the Global Forum ................................................................................................. 5

Executive Summary ......................................................................................................... 7

Introduction...................................................................................................................... 9
     Information and methodology used for the peer review of India ................................... 9
     Overview of India ........................................................................................................ 10
     Recent developments ................................................................................................... 13
Compliance with the Standards .................................................................................... 15

A.          Availability of Information ................................................................................ 15
     Overview ...................................................................................................................... 15
     A.1. Ownership and identity information ................................................................... 17
     A.2. Accounting records............................................................................................. 35
     A.3. Banking information........................................................................................... 47
B.          Access to Information ......................................................................................... 49
     Overview ...................................................................................................................... 49
     B.1. Competent Authority’s ability to obtain and provide information .................... 50
     B.2. Notification requirements and rights and safeguards ........................................ 55
C.          Exchanging Information .................................................................................... 57
     Overview ...................................................................................................................... 57
     C.1. Exchange-of-information mechanisms ............................................................. 58
     C.2. Exchange-of-information mechanisms with all relevant partners..................... 63
     C.3. Confidentiality .................................................................................................. 65
     C.4. Rights and safeguards of taxpayers and third parties ........................................ 67
     C.5. Timeliness of responses to requests for information......................................... 68
Summary of Determinations and Factors Underlying Recommendations ............... 71

Annex 1: Jurisdiction’s Response to the Review Report ............................................ 73

Annex 2: List of All Exchange-of-Information Mechanisms in Force ...................... 75

PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
4 – TABLE OF CONTENTS

Annex 3: List of All Laws, Regulations and Other Material Received ..................... 79

Annex 4:     Overview of Commercial Laws and Other Relevant Factors for
Exchange of Information ............................................................................................... 81




                                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                                                                      ABOUT THE GLOBAL FORUM – 5




                              About the Global Forum

           The Global Forum on Transparency and Exchange of Information for Tax
      Purposes is the multilateral framework within which work in the area of tax
      transparency and exchange of information is carried out by over 90
      jurisdictions which participate in the work of the Global Forum on an equal
      footing.
          The Global Forum is charged with in-depth monitoring and peer review of
      the implementation of the standards of transparency and exchange of
      information for tax purposes. These standards are primarily reflected in the
      2002 OECD Model Agreement on Exchange of Information on Tax Matters
      and its commentary, and in Article 26 of the OECD Model Tax Convention on
      Income and on Capital and its commentary as updated in 2004, which has been
      incorporated in the UN Model Tax Convention.
           The standards provide for international exchange on request of foreseeably
      relevant information for the administration or enforcement of the domestic tax
      laws of a requesting party. Fishing expeditions are not authorised but all
      foreseeably relevant information must be provided, including bank information
      and information held by fiduciaries, regardless of the existence of a domestic
      tax interest or the application of a dual criminality standard.
          All members of the Global Forum, as well as jurisdictions identified by the
      Global Forum as relevant to its work, are being reviewed. This process is
      undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s
      legal and regulatory framework for the exchange of information, while Phase 2
      reviews look at the practical implementation of that framework. Some Global
      Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews.
      The ultimate goal is to help jurisdictions to effectively implement the
      international standards of transparency and exchange of information for tax
      purposes.
          All review reports are published once approved by the Global Forum and
      they thus represent agreed Global Forum reports.
          For more information on the work of the Global Forum on Transparency
      and Exchange of Information for Tax Purposes, and for copies of the published
      review reports, please refer to www.oecd.org/tax/transparency.



PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                                                                            EXECUTIVE SUMMARY – 7




                                  Executive Summary

       1.        This report summarises the legal and regulatory framework for
       transparency and exchange of information in India.
       2.        India is Asia's second-largest country by size and the second most
       populous country in the world. It is the world’s 11th largest economy, by
       nominal GDP, and is engaged with many trading partners. India has an
       extensive network of treaties which allow for exchange of information for tax
       purposes and has been actively engaged in exchanging information for more
       than 40 years. As a member of the G20, in 2009 India committed to
       implement the agreed international standard for tax transparency and exchange
       of information and became a member of the restructured Global Forum on
       Transparency and Exchange of Information for Tax Purposes.
       3.         It is India’s policy to exchange information to the standards as
       reflected in its Double Tax Conventions (DTCs) which provide for effective
       exchange of information, with the exception of a limited number of old DTCs.
       4.         Exchange of information articles in India’s DTCs have
       confidentiality provisions in line with the international standards and India’s
       domestic legislation also contains confidentiality provisions. In addition, each
       of India’s DTCs ensures that information would not be shared which would
       disclose trade, business, industrial, commercial or professional secrets; be
       subject to attorney client privilege; or be contrary to public policy.
       5.         India’s treaty policy is complemented by wide-ranging powers to
       request information, search premises and seize documents. There are no
       limitations - e.g. domestic tax interest, limited to criminal tax matters, limited
       by de minimis threshold, limited to taxpayers currently under examination - on
       the competent authority’s ability to use these information gathering powers.
       These powers may be used to respond to an international exchange of
       information request. They provide the ability to obtain information held by
       banks, other financial institutions, and any person acting in an agency or
       fiduciary capacity including nominees and trustees, as well as information
       regarding the ownership of companies, partnerships, trusts, and other relevant
       entities. Further, these powers include the ability to obtain accounting records
       from all natural and legal persons.




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
8 – EXECUTIVE SUMMARY
     6.         No bank secrecy or corporate secrecy provisions in India’s laws
     would limit the ability of the competent authority to respond to an
     international exchange of information request. Similarly, the rights and
     safeguards that apply to persons in India should not unduly prevent or delay
     the effective exchange of information.
     7.         Information is available that identifies the owners of companies -
     domestic and foreign - and members of bodies corporate. Various declaration
     requirements pertaining to nominee owners of shares are in place. Registered
     companies are required to keep accounts which explain all transactions, enable
     the company’s financial position to be determined and which allow for
     financial statements to be prepared. Companies and co-operative societies are
     also obliged to keep related underlying documentation.
     8.         Information is available identifying the partners in general and
     limited liability partnerships in India and the partners in foreign partnerships
     which operate in India. The obligations for partnerships ensure that partners
     and persons in certain professions deriving income from the partnership keep
     accounts which explain transactions, enable the firm’s financial position to be
     determined and allow for preparation of financial statements. Partnerships are
     also obliged to keep underlying documentation for the accounting records.
     9.         India allows for the creation of trusts and some registration
     requirements exist for these types of legal arrangements. Information is
     available that identifies the settlors, trustees and beneficiaries of express trusts
     and accounting records which must be kept for trusts. Persons assessed for the
     income of a trust are obliged to keep underlying documentation for the
     accounting records.
     10.       The accounting records and underlying documentation kept by
     companies, partnerships and trusts are required to be kept for at least five
     years and banks, financial institutions and financial intermediaries are obliged
     to maintain transaction records for ten years from the date of the transaction.
     11.        India’s response to the determinations, factors and recommendations
     in this report, as well as the application of the legal framework to the practices
     of its competent authority, will be considered in detail in the Phase 2 Peer
     Review, which is scheduled for the second half of 2012.




                 PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                                                                                   INTRODUCTION – 9




                                         Introduction



Information and methodology used for the peer review of India

       12.       The assessment of the legal and regulatory framework of India was
       based on the international standards for transparency and exchange of
       information as described in the Global Forum’s Terms of Reference, and was
       prepared using the Global Forum’s Methodology for Peer Reviews and Non-
       Member Reviews. The assessment was based on the laws, regulations, and
       exchange-of-information mechanisms in force or effect as at May 2010, other
       materials supplied by India, and information supplied by partner jurisdictions.
       13.         The Terms of Reference break down the standards of transparency
       and exchange of information into 10 essential elements and 31 enumerated
       aspects under three broad categories: (A) availability of information; (B)
       access to information; and (C) exchanging information. This review assesses
       India’s legal and regulatory framework against these elements and each of the
       enumerated aspects. In respect of each essential element, a determination is
       made that either: (i) the element is in place; (ii) the element is in place but
       certain aspects of the legal implementation of the element need improvement;
       or (iii) the element is not in place. These determinations are accompanied by
       recommendations on how certain aspects of the system could be strengthened
       (see Summary of Determinations and Factors Underlying Recommendations
       on page 71).
       14.       The assessment was conducted by a team which consisted of two
       assessors and a representative of the Global Forum Secretariat: Ms. Yanga
       Mputa of the South Africa Revenue Service; Mr. Günter Dauben of the
       German Federal Central Tax Office; and Ms Rachelle Boyle from the Global
       Forum Secretariat. The assessment team examined the legal and regulatory
       framework for transparency and exchange of information and relevant
       exchange of information mechanisms in India.




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
10 – INTRODUCTION
Overview of India

      15.        The Republic of India (hereinafter referred to as India) is Asia's
      second largest country by size and has a population of 1 186 billion,1 making
      it the second most populous country in the world. It is a multilingual society
      with 22 principal languages. Hindi is the national language and primary
      tongue of a large percentage of people, while English is the preferred business
      language. India shares borders with Pakistan and Afghanistan in the west;
      Bangladesh and Myanmar in the east; and Nepal, China and Bhutan in the
      north.
      16.        India’s 2009 Gross Domestic Product was USD 1 209 billion.2 A
      balance of payments crisis in 1991 was the catalyst for a program of
      significant economic reforms including: liberalisation of foreign investment
      and exchange regimes; significant reductions in tariffs and other trade barriers;
      financial sector reforms; and significant adjustments in monetary and fiscal
      policies. Since that time, India has become an attractive destination for
      foreign capital, with net capital inflows increasing to 9.2% in 2007-2008.3
      The services sector has become a major part of the economy, representing
      more than 50% of GDP. Please see Annex 4 for an overview of India’s
      financial sector and relevant professions.
      17.        Exchange controls have been reduced over the past decade,
      particularly since enactment of the Foreign Exchange Management Act 1999.
      This act and the remaining exchange controls are oversighted by the Reserve
      Bank of India (RBI).

      General information on legal system and the taxation system
      18.       After a period of colonial rule India achieved independence from
      Britain in 1947. The 1950 Constitution provides for a parliamentary system

1
      IFS - International Financial Statistics, International Monetary Fund, accessed
      19 April 2010:
      http://www.imf.org/external/pubs/ft/weo/2009/02/weodata/weorept.aspx?sy=20
      07&ey=2014&scsm=1&ssd=1&sort=country&ds=.&br=1&c=534&s=LP&grp=
      0&a=&pr1.x=73&pr1.y=5.
2
      World Economic Outlook Database April 2010, International Monetary Fund,
      Accessed 19 April 2010:
      http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weorept.aspx?sy=20
      08&ey=2010&scsm=1&ssd=1&sort=country&ds=.&br=1&c=534&s=NGDPD
      &grp=0&a=&pr1.x=70&pr1.y=11#cs1.
3
      The External Economy, the Reserve Bank of India, 28 January 2010, accessed
      19 April 2010: http://www.rbi.org.in/scripts/PublicationsView.aspx?Id=12073.



                    PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                                                                                   INTRODUCTION – 11



       with a bicameral parliament and three branches: the executive, legislative and
       judiciary. It has a federal system consisting of the Central Government and
       the State Governments. The Government exercises broad administrative
       powers in the name of the President, whose duties are largely ceremonial. The
       Parliament, the supreme legislative body of India, comprises the President and
       the two Houses: Lok Sabha (the lower house of the Parliament) and Rajya
       Sabha (the Council of States). All legislation requires the consent of both
       Houses of Parliament. For financial and related legislation, the will of the Lok
       Sabha prevails. The national executive power is centred in the Council of
       Ministers (the Cabinet), led by the Prime Minister.
       19.        There are also elected governments in the 28 States and in the 7
       Union Territories. The States' Chief Ministers are responsible to the
       legislatures in the same way as the Prime Minister is responsible to
       Parliament. Each State also has a Governor appointed by the President, who
       may assume certain broad powers when directed by the Central Government.
       The Central Government exerts greater control over the Union Territories than
       over the States, although some Territories have gained power to administer
       their own affairs.
       20.        The Indian legal system is based on common law. The division of
       powers into Union powers, State powers and concurrent powers can be found
       in a Schedule to the Constitution. If a power is listed as concurrent, the States
       are prevented from enacting laws that are inconsistent with Union laws. Any
       residual powers rest with the Union. Rules, Regulations, Orders, Declarations,
       Notifications, and Guidelines are issued under the authority of the relevant act
       and provide detail with regard to the statutory obligations. Rules, Regulations
       and Orders, published in the Government Gazette, have the force of law.
       Laws issued by the Parliament extend throughout the territory of India and
       those made by State legislatures generally apply only within the territory of
       the State concerned. Please see Annex 4 for an overview of relevant laws.
       21.       India has a well-developed tax structure with demarcated authority
       between Central and State Governments and local bodies. In accordance with
       Schedule 7 to the Constitution, the majority of laws relating to civil, criminal
       and tax jurisprudence are federal in nature. The Central Government levies
       taxes on income (except tax on agricultural income, which the State
       Governments can levy), customs duties, central excise and service tax. Value
       Added Tax (VAT),4 stamp duty, State excise, land revenue and tax on
       professions are levied by the State Governments. Local bodies are
       empowered to levy tax on properties, octroi and for utilities (e.g. water
       supply).
4
        Since 1 April 2005, most of the State Governments in India have replaced
        sales tax with VAT.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
12 – INTRODUCTION
      22.        Exchange of Information for tax purposes is solely a power of the
      Central Government, which is empowered under the Income-tax Act 1961
      (ITA) s.90 to enter into agreements for the exchange of information with other
      countries or specified territories. In India, two Joint Secretaries (FT&TR-I
      and FT&TR-II) in the Department of Revenue, Ministry of Finance, head the
      competent authority of India for all matters relating to international tax
      matters. The Joint Secretaries are responsible for treaty negotiations and for
      exchange of information in accordance with such agreements. The competent
      authority may request information from the state tax authorities (s.131,
      s.133(6), s.138).
      23.      India established its first DTC in 1965. In 2009, India committed to
      implement the agreed international standard for tax transparency and exchange
      of information and became a member of the restructured Global Forum on
      Transparency and Exchange of Information for Tax Purposes.
      24.       India has a sliding scale for taxes on individuals and co-operative
      societies. For individuals, no tax is payable on annual income up to INR
      160 000 (EUR 2 811),5 or INR 190 000 (EUR 3 338) for women or INR
      240 000 (EUR 4 217) for senior citizens. Income of between INR 160 000 to
      INR 500 000 (EUR 8 785) is taxed at 10%. Income from INR 500 000 to
      INR 800 000 (EUR 14 056) is taxed at 20%, and income beyond that threshold
      is taxed at 30%. For co-operative societies, a tax rate of 10% is applied to
      income up to INR 10 000 (EUR 176), 20% for income between INR 10 000
      and INR 20 000 (EUR 351) and a rate of 30% is applied to income over
      INR 20 000.
      25.       A flat tax rate of 30% is payable by firms, domestic companies and
      local authorities. Domestic companies must also pay a 7.5% surcharge if their
      total income for the year exceeds INR 10 000 000 (EUR 175 700).




5
      According to the foreign exchange rate of 31 May 2010, INR 1 = EUR
      0.01757 and EUR 1 = INR 56.91168, rounded off to the nearest whole
      number in EUR (source: http://www.xe.com/).



                    PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                                                                                   INTRODUCTION – 13




Recent developments

       26.      In last ten to 15 years, the Indian taxation system has undergone
       tremendous reforms. The tax rates have been rationalised and tax laws have
       been simplified.6 The process of rationalisation of tax administration is
       ongoing in India.
       27.        The Government is currently considering revisions to the
       Companies Act 1956. The Companies Bill 2009 which seeks to replace the
       existing act seeks inter alia to revise the provisions related to sanctions for
       companies which do not comply with obligations under that act. The bill
       proposes both minimum and maximum fines/imprisonment in relevant penal
       clauses, in addition to enhancing the quantum of level of fine/imprisonment
       from their current levels. Further, the bill proposes stricter penalties for repeat
       offences and for offences involving fraud.




6
        Taxation System in India, the Indian Embassy in Washington D.C., accessed 19
        April 2010.
        http://www.indianembassy.org/newsite//doing_business_in_india/fiscal_taxatio
        n_system_in_india.asp.



PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                           COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 15




                        Compliance with the Standards




A.        Availability of Information



Overview

       28.        Effective exchange of information requires the availability of
       reliable information. In particular, it requires information on the identity of
       owners and other stakeholders as well as information on the transactions
       carried out by entities and other organisational structures. Such information
       may be kept for tax, regulatory, commercial or other reasons. If the
       information is not kept or it is not maintained for a reasonable period of time,
       a jurisdiction’s competent authority may not be able to obtain and provide it
       when requested. This section of the report assesses the adequacy of India’s
       legal and regulatory framework on availability of information.
       29.        Information is available that identifies the owners of companies -
       domestic and foreign - and members of any bodies corporate. In addition, in
       accordance with anti-money laundering (AML) provisions, banks, financial
       institutions and financial intermediaries are obliged to verify and maintain the
       records of the identity of their clients. Directors and officers are not
       statutorily required to hold any ownership information in respect of the
       company or co-operative society, nor are other persons. Various declaration
       requirements pertaining to beneficial owners of shares are in place.
       30.       Registered companies are required to keep books of account which
       correctly explain all transactions, enable the company’s financial position to
       be determined with reasonable accuracy at any time and which allow for
       financial statements to be prepared. Companies are also obliged to keep
       related underlying documentation.




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
16 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
      31.        Information is available that identifies the partners in general and
      limited liability partnerships in India, as well as foreign limited liability
      partnerships operating in India, both through information submitted in tax
      returns and in accordance with AML provisions that oblige banks, financial
      institutions and financial intermediaries to verify and maintain records of the
      identity of their clients – including partnerships. Partners of limited liability
      partnerships are required to submit information to the partnership whenever
      they alter their names or permanent addresses. There are no other persons
      required to hold any ownership information with respect to partnerships.
      32.       All types of partnerships are required to submit accounting records
      to India’s Income Tax Department (ITD) each year. In addition, the
      obligations for limited liability partnerships ensure that partners and persons in
      certain professions deriving income from limited liability partnerships keep
      accounts which correctly explain transactions, enable the company’s financial
      position to be accurately determined and allow for financial statements to be
      prepared. Limited liability partnerships are also obliged to keep underlying
      documentation for the accounting records.
      33.        Information is available that identifies the settlers, trustees and
      beneficiaries of express trusts. India allows for the creation of trusts and some
      limited registration requirements exist for these types of legal arrangements.
      As for companies and partnerships, AML provisions oblige banks, financial
      institutions and financial intermediaries to verify and maintain records of the
      identity of their clients – including trusts. There are no requirements that
      trustees hold information on settlers, trustees or beneficiaries. Accountants
      who are trustees or in any way manage trusts are obliged to keep accounts
      which correctly explain all transactions, enable the trust’s financial position to
      be accurately determined at any time and which allow for financial statements
      to be prepared. Persons being assessed for the income of a trust are obliged to
      keep underlying documentation for the accounting records.
      34.        The ITD has wide-ranging powers to request information, search
      premises and seize documents. There are no limitations - e.g. domestic tax
      interest, limited to criminal tax matters, limited by de minimis threshold,
      limited to taxpayers currently under examination - on the competent
      authority’s ability to use these information gathering powers. There are no
      special procedures required to be invoked in order to exercise such powers.
      The competent authority also has the power to obtain, for tax purposes,
      ownership, identity and accounting information which is required to be held
      by anyone for AML purposes.
      35.       The accounting records and underlying documentation kept by
      companies, partnerships and trusts are required to be kept for at least five
      years.    Documents must be retained by companies, limited liability
      partnerships and trusts for six or seven years (depending on the nature of the


                  PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                           COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 17



       document). For companies and limited liability partnerships it is eight years.
       Underlying documentation is covered by all of these provisions. These
       records do not necessarily have to be kept in India, but they must be presented
       if requested by the relevant government authority. Banks, financial
       institutions and financial intermediaries are obliged to maintain customer
       identification records and transaction records for ten years from the date of the
       transaction.



A.1. Ownership and identity information

         Jurisdictions should ensure that ownership and identity information for all
         relevant entities and arrangements is available to their competent
         authorities.


       Companies (ToR A.1.1)
       36.       In Indian law, the term ‘company’ is used to refer to any company
       formed and registered under the Companies Act 1956 or formed and
       registered under any of the previous companies laws of India. The Companies
       Act 1956 s.3 provides for creation of private and public companies. Private
       companies which are subsidiaries of public companies are considered to be
       public companies. In addition, India has: companies with unlimited liability
       (s.12(2)(c)); bodies corporate (s.2); producer companies (s.581C); companies
       limited by guarantee and not for profit associations (s.25); and foreign
       companies (s.591):
                          Details                          Number (30 April 2010)
          Public limited companies                                   80 552
          Private limited companies                                 731 471
          Companies with unlimited liability                           615
          Companies limited by guarantees                             6 623
          and NPOs
          Producer companies                                           327
          Foreign companies                                           2 333


       Ownership information on domestic companies
       37.       Companies formed under the Companies Act 1956 are required to be
       registered with the relevant Registrar of Companies, and, under the ITA, they
       are required to lodge tax returns.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
18 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
      38.       Section 33 of the Companies Act 1956 provides that the company
      must present the following documents to the Companies Registrar in the State
      in which its primary office is situated:
     •      the memorandum of the company;

     •      its articles, if any;

     •      the agreement, if any, which the company proposes to enter into with any
            individual for appointment as its managing or whole-time director or
            manager; and

     •      a declaration by a person who is engaged in the formation of the company7
            or by a director, manager or secretary of the company, that all the
            requirements of the Companies Act 1956, including registration
            requirements, have been complied with.

      39.       If the Companies Registrar is satisfied, s/he will retain and register
      these documents. Commonly, the articles of association covers the rules and
      procedures for the routine conduct of the proposed company, the authorised
      share capital of the proposed company and also the names of its first or
      permanent directors. In addition, the company must submit to the registrar a
      list showing the names, addresses and occupations of the company directors
      and the manager, if any, of the company (s.568). For listed companies there is
      an additional requirement that they submit details showing the shareholding of
      each of the members (i.e. shareholders and any other persons listed in the
      company memorandum) of the company (s.567, read with s.41).
      40.     Thereafter, all types of companies are required to maintain a register
      of members (s.150) containing:
     •      the name and address, and the occupation, if any, of each member;

     •      for a company having a share capital, details of the shares held by each
            member;

     •      the date at which each person became and, if relevant, ceased to be, a
            member.

      41.       While the Companies Act 1956 does not specifically provide a
      process for or the timeframe within which changes to the company’s members
7
         This may be an advocate of the Supreme Court or of a High Court/an attorney
         or a pleader entitled to appear before a High Court, a company secretary, or a
         chartered accountant.



                     PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – INDIA © OECD 2010
                           COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 19



       must be incorporated in the register, s.113(1) obliges companies to issue
       certificates of shares, debentures or debenture stock within two months of
       receipt of application for registration of a transfer of shares. It could
       reasonably be expected that issuance of the certificates would involve
       including the new owner information in the share register.
       42.        Subsequent changes in ownership/shareholding pattern are required
       to be informed to the registrar through: return of allotments within 30 days of
       an allotment of shares (s.75); and the annual return. The annual return must
       be submitted to the registrar within 60 days of its Annual General Meeting,
       detailing (s.159 and s.160) inter alia:
      •     the register of its members;

      •     the register of its debenture holders (listed companies only);

      •     its shares and debentures (listed companies only);

      •     its members and debenture holders, past and present (listed companies
            only); and

      •     its directors, managing directors, managers and secretaries, past and
            present.

       43.        Companies with more than 50 members must also, unless the
       register is in such a form as to satisfy this requirement, maintain an index of
       members (s.151), the purpose of which is to allow for identification of all
       entries on the register which relate to a particular member. Within 14 days
       after the date on which any alteration is made in the register of members,
       corresponding alterations must be made to the index.
       44.       For listed companies, s.187C also requires that shareholders who are
       not the beneficial owners of those shares submit a declaration to the company
       specifying the name and other particulars of the person who holds the
       beneficial interest in the shares. Similarly, persons who are beneficial owners
       of the shares must, within 30 days of becoming a beneficial owner, submit a
       declaration to the company specifying the nature of his interest, particulars of
       the person in whose name the shares stand registered in the books of the
       company and such other particulars as may be prescribed. Whenever there is a
       change in the beneficial interest in such shares, the beneficial owner shall,
       within 30 days of the change, make a declaration to the company in such form
       and containing such particulars as may be prescribed. The company is
       required to make a note of such declarations in its register of members and is
       required to file, within 30 days from the date of receipt of the declaration, a



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      return in the prescribed form with theRegistrar of Companies. Neither the
      Companies Act 1956 nor the Companies (Declaration of Beneficial Interest in
      Shares) Rules 1975 define ‘beneficial interest’ though Indian authorities have
      stated that this term is interpreted broadly to mean ultimate beneficial owners
      where there are layers in an ownership chain.
      45.        Under ITA s.139(1), all companies in India must submit an annual
      tax return. Companies are required to lodge their tax returns using form ITR6
      (for companies not claiming exemption for charitable activity) or ITR7 (for
      companies claiming exemption for charitable activities). ITR6 requires
      information on the managing director, directors, secretary and principal
      officer(s) who have held the office during the previous year, and also requires
      information on persons who were beneficial owners of shares holding not less
      than 10% of the voting power at any time of the previous year. ITR7 requires
      information on: the author(s), founder(s) and address(es), if alive; the
      person(s) who was/were trustee(s)/manager(s) during the previous year(s); the
      person(s) who has/have made substantial contribution to the trust/institution in
      terms of s.13(3)(b); relative(s) of author(s), founder(s), trustee(s), manager(s),
      and substantial contributor(s); and where any such author, founder, trustee,
      manager or substantial contributor is a Hindu undivided family, the names of
      the members of the family and their relatives.
      46.        Companies incorporated in India may, if they have no local
      operations, not be obliged to submit a tax return. While in such cases
      ownership and identity information might not be submitted directly to the
      ITD, all companies incorporated in India must register with the Companies
      Registrar and provide updated information to that Registrar regardless of the
      level of income earnt in India.
      Ownership information on co-operatives
      47.       India also has co-operatives, which are associations of persons
      formed with the object of promotion of the economic interests of its members
      in accordance with co-operative principles (Co-operative Societies Act 1912).
      The liability of a society is limited unless the object of the society is the
      creation of funds to be lent to its members, and of which the majority of the
      members are agriculturists, and of which no member is a registered society.
      Where the liability of the members of a society is limited by shares, no
      member other than a registered society may: (i) hold more than 1/5 of the
      share capital of the society; or (ii) have or claim any interest in the shares of
      the society exceeding INR 1 000 (EUR 17.57).
      48.       Co-operatives must be registered with the Registrar of Co-operative
      Societies (s.4). The registration application must attach inter alia a list of
      persons who have contributed to the share capital, together with the amount




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       contributed by each of them, and the admission fee paid by them. Registration
       renders the co-operative a body corporate.
       49.       Under the ITA, societies which meet specified economic criteria are
       required to submit tax returns and in those returns disclose the names and
       addresses of the members of the co-operative.

       Ownership information on foreign companies
       50.     Foreign companies are required to file documents with the
       Companies Registrar within 30 days of establishing their place of business
       (Companies Act 1956, s.592) which include:
      •     the charter, statutes, or memorandum and articles of the company or other
            instrument constituting or defining the constitution of the company;

      •     a list of the directors and secretary of the company; and

      •     the name and address or the names and addresses of some one or more
            persons resident in India, authorised to accept on behalf of the company
            service of process and any notices or other documents required to be
            served on the company.

       51.        The Companies (Central Government’s) General Rules and Forms
       1956 provisions, with respect to documents, include requirements in terms of
       certification and translation. Subsequent changes in any of this information
       must be informed to the registrar on or before 31 January of the year following
       the year in which the alteration was made or occurred (s.593, read in
       conjunction with the Companies (Central Government’s) General Rules and
       Forms 1956).
       52.       In addition, as with the domestic companies, foreign companies are
       required to maintain a register of members (s.150), and those with more than
       50 members must also maintain in index of members (s.151). A foreign
       company with control and management in India is required to fulfil all of its
       tax obligations in the same manner as an Indian company. The same
       information is required by the ITD, using the same forms, for domestic and
       foreign companies.
       Ownership information held by service providers
       53.       While most forms of service providers, e.g. lawyers, accountants
       and company formation agents, are not required to keep information on the
       owners of companies they provide services to, every banking company,
       financial institution and intermediary is obliged under s.12(c) of the



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      Prevention of Money Laundering Act 2002 (PMLA) and the PMLA Rules8 to
      verify and maintain the records of the identity of all its clients in hard and soft
      copy for at least ten years from the date of cessation of the transactions
      between the client and the banking company or financial institution or
      intermediary. For the purposes of that act, an “intermediary” is a stock-
      broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust
      deed, registrar to an issue, merchant banker, underwriter, portfolio manager,
      investment adviser and any other intermediary associated with securities
      market and registered under s.12 of the Securities and Exchange Board of
      India Act 1992.
      54.        The PMLA Rules include more detailed know-your-customer
      obligations. Under Rule 9, as amended in November 2009, every banking
      company, financial institution and intermediary, must at the time of opening
      an account or executing any transaction with it verify and maintain the record
      of identity and current address or addresses including permanent address or
      addresses of the client, the nature of business of the client and his financial
      status. In addition, these financial institutions are obliged under Rule 9(1A) to
      “identify the beneficial owner and take all reasonable steps to verify his
      identity”. A February 2010 amendment to the PMLA Rules defines
      “beneficial owner” broadly, as being “the natural person who ultimately owns
      or controls a client and or the person on whose behalf a transaction is being
      conducted, and includes a person who exercise[sic] ultimate effective control
      over a juridical person”.
      55.        Similarly, s2.4(a) of the Reserve Bank of India Master Circular
      (Master Circular) requires banks, in the case of customers that are legal
      persons or entities, to “understand the ownership and control structure of the
      customer and determine who are the natural persons who ultimately control
      the legal person”. This section also references the need to take reasonable
      measures to verify the identity of the beneficial owner, and to establish the
      purpose and the intended nature of the banking relationship. Section 2.5(ii)
      states that “banks should examine the control structure of the entity, determine
      the source of funds and identify the natural persons who have a controlling
      interest and who comprise the management”.
      56.       The Master Circular also addresses the issue of client accounts
      opened by professional intermediaries. It establishes that in the case of
      accounts held on behalf of a single client and “pooled” accounts, the financial

8
      Prevention of Money-laundering (Maintenance of Records of the Nature and
      Value of Transactions, the Procedure and Manner of Maintaining and Time for
      Furnishing Information and Verification and Maintenance of Records of the
      Identity of the Clients of the Banking Companies, Financial Institutions and
      Intermediaries) Rules 2005.



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       institution must look through to the beneficial owners of the funds. Further, in
       June 2010, the Reserve Bank of India issued three circulars9 clarifying this
       requirement and noting inter alia that this requirement applies with respect to
       accounts opened by professionals who are subject to secrecy provisions.
       Ownership Information held by directors and officers

       57.        Directors and officers are not statutorily required to hold any
       ownership information in respect of the company. There is no requirement
       that an Indian company must have a resident director or officer.

       Ownership information held by other persons
       58.       In India, practicing chartered accountants, company secretaries and
       lawyers undertake the work of company formation agents. None of these
       professions, when acting as company formation agents, are required to obtain
       or maintain information pertaining to the companies they have formed.

       Documentation retention requirements
       59.       The document retention requirements under the Companies Act
       1956 are primarily found in s.209(4A), which requires all companies to retain
       books of account, together with vouchers related to entries in the books of
       account, for at least eight years. In addition, s.163(1A) empowers the central
       Government to make rules for the preservation and disposal of records.
       Accordingly, the Companies (Preservation and Disposal of Records) Rules
       1966 were established and these provide that all companies must preserve:
      •      the register and index of members – permanently;

      •      the register and index of debenture holders – 15 years after redemption;

      •      annual returns and certifications (under sections 159, 160 and 161) – eight
             years from the date of filing with the Registrar.

       60.       Under the ITA, documents must be retained for a period of seven
       years from the end of the relevant year which may get extended until
       completion of assessment if a notice for reopening of assessment is issued
       within this period. The retention period is not affected by possible subsequent
       events.
9
          These circulars contain mandatory language and, in accordance with s.45L and
          s.45M of the Reserve Bank of India Act 1934, circulars issued by the Reserve
          Bank of India are mandatory and enforceable.



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      61.       Under s.12(c) of the PMLA,10 documents related to the conduct of
      customer due diligence are to be maintained for a period of ten years from the
      date of the cessation of the transaction between the clients and the banking
      company or financial institution or intermediary, as the case may be. As the
      period of time is determined by the date at which the transaction occurred, the
      retention period is not affected by possible subsequent events.
      62.       The Companies Registrars keep information filed by companies
      within India. The registers themselves must be preserved permanently
      (Disposal of Records (in the Offices of the Registrars of Companies) Rules
      2003, Rule 3). Particulars of company Directors and the Register of Directors
      must be kept for five years (Rule 5 and Schedule II). Registered documents of
      companies which have been fully wound up and finally dissolved together
      with correspondence relating to such companies are also kept for five years
      (Rule 4). For foreign companies which cease to have any place of business in
      India, the documents may be destroyed after three years from the date such
      company ceases to have any place of business in India (Rule 6).
      63.        Other information required to be kept under the PMLA or the ITA
      need not necessarily be kept within India, but must be available to the
      authorities when requested .

      Bearer shares (ToR A.1.2)
      64.       India does not allow for the issuance of bearer shares. Registration
      requirements and obligations with respect to disclosures to the ITD have been
      discussed previously in this report.

      Partnerships (ToR A.1.3)
      65.       General partnerships are regulated through the Partnership Act
      1932, which is administered by the States. In this context, "partnership" is the
      relation between persons who have agreed to share the profits of a business
      carried on by all or any of them acting for all. The relation of partnership
      arises from contract and not from status (s.4). General partnerships are
      registered with State registrars and the number of such partnerships is not
      known.
      66.       Limited liability partnerships are regulated through the Limited
      Liability Partnership Act 2008, which is centrally administered by the
      Ministry of Corporate Affairs. A limited liability partnership (LLP) is a body
      corporate formed and incorporated under the Limited Liability Partnership Act


10
      Read in conjunction with s.10 of the PMLA Rules.



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       2008. It possesses a separate legal entity from that of its partners (s.3). As at
       30 April 2010, there were 1 266 LLPs in India.

       Ownership information on partnerships
       67.       General partnerships, LLPs and foreign LLPs operating in India
       have to register and lodge tax returns. While requirements under the
       Partnership Act 1932 and Limited Liability Partnership Act 2008 are different,
       under the ITA, the taxation requirements are the same for all types of
       partnerships.
       68.        The Partnership Act 1932, s.58 provides that partnerships must
       register with the relevant Companies Registrar. A copy of the partnership
       deed must be provided and that deed must, among other things, include the
       names, in full, and the permanent addresses of the partners. In addition, when
       there are important changes in the partnership, the details must be submitted to
       the Companies Registrar. Section 62 provides that when any partner in a
       registered firm alters his name or permanent address, an notification of the
       alteration must be sent, within 90 days of the date of making such alteration,
       by the partner or by an agent of the firm to the Companies Registrar, who will
       then make a note of this in the entry relating to the firm in the Register of
       Firms. Further, s.63 provides that when a change occurs in the constitution of
       a registered partnership and where a partnership is dissolved, every incoming,
       continuing or outgoing partner, or the agent of every such partner or person
       specially authorised in this behalf must, within 90 days of the change or
       dissolution, given notify the Companies Registrar and the registrar will record
       this in the entry relating to the firm.
       69.        Section 11 of the Limited Liability Partnership Act 2008 requires
       LLPs to register with the Companies Registrar in their State. The names and
       addresses of each of the partners must be contained in the incorporation
       document which is submitted to the registrar. In practice these registrations
       now commonly occur online and are managed centrally by the Ministry of
       Corporate Affairs.11 Section 25 provides that when any partner alters his
       name or permanent address, a notification of the alteration is to be sent within
       15 days to the LLP and it in turn is to file a notice of the change with the
       Companies Registrar in their state within 30 days. A similar notice is to be
       filed for cessation of a partner or entry of a new partner.
       70.       Foreign LLPs must, within 30 days of establishment of place of
       business in India, file details with the Companies Registrar along with a copy
       of the certificate of incorporation, full address of the partnership, full address
       of its place(s) of business in India and a list of partners and designated
11
        http://www.llp.gov.in.



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      partners (Limited Liability Partnerships Rules 2009, s.34). Any alterations to
      the constitution of the foreign LLP, its principal office outside India, or to the
      partners or designated partner must be submitted to the Companies Registrar
      within 60 days of the close of the financial year in which the change occurred.
      Changes to the incorporation document, the details of the person authorised to
      accept service on behalf of the partnership or its principal place of business in
      India should be submitted to the Companies Registrar within 30 days of the
      change.
      71.       All partnerships are required to disclose the names and addresses of
      the partners, including changes, in their tax returns (form ITR5). Not
      furnishing a tax returns or providing false information in a return are subject to
      penalty and prosecution under the ITA.
      72.        Under ITA s.44AB, an audited report is required to be filed by the
      taxpayer if his turnover during the year exceeds INR 6 million (EUR 105 420)
      from business or INR 1.5 million (EUR 26 355) from profession.12 This
      report, using form 3CD, is required to be signed by an accountant. In the case
      of partnerships, the names of partners and details of changes in partners are
      required to be given under item 7(a) and 7(b).

      Information held by service providers
      73.         Every banking company, financial institution and intermediary is
      obliged under PMLA s.12(c), to verify and maintain the records of the identity
      of all its clients. The PMLA Rules include more detailed know-your-customer
      rules. Under Rule 9, as amended in November 2009, every banking company,
      financial institution and intermediary must at the time of opening an account
      or executing any transaction with it, verify and maintain the record of identity
      and current address or addresses including permanent address or addresses of
      the client, the nature of business of the client and his financial status.
      74.        Where the client is a partnership firm, under that rule it must submit
      certain documents to the banking company or financial institution or
      intermediary which include the registration certificate (if one exists) and the
      partnership deed (if one exists). In addition, Rule 9(1A) requires all banks,
      financial institutions and intermediaries to “identify the beneficial owner and
      take all reasonable steps to verify his identity.”




12
      The thresholds were raised to this level by Finance Act 2010, which was passed
      on 8 May 2010.



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       Information held by the partnership or partners
       75.       While there are no specific requirements that each partner hold
       information on all of the partners, partners in general partnerships are likely to
       know the names and addresses of the other partners. Section 58 of the
       Partnership Act 1932 makes it clear that all the partners must sign the
       partnership deed, which contains the names in full and permanent addresses of
       all partners. Further, according to s.31, no person may be introduced as a
       partner without the consent of all existing partners and under s.32, a partner
       may only retire with the consent of all the other partners, in accordance with
       an express agreement by the partners, or where the partnership is at will by
       giving notice in writing to all the other partners of his intention to retire.
       76.       As noted previously, partners of LLPs are required under s.25 to
       submit information to the partnership whenever they alter their names or
       permanent addresses. Annex C to the Limited Liability Partnership Rules
       2009 requires that such documents be retained by the partnership for at least
       five years. There are no requirements that each of the partners in a LLP hold
       information on all of the partners.

       Information held by others
       77.      In India charted accountants, company secretaries, cost accountants
       and advocates undertake the work of LLP formation. However there are no
       requirements that persons in these professions or other persons have
       ownership information on relevant partnerships.

       Document retention requirements
       78.       Under Limited Liability Partnership Rules 2009, Annexures B and
       C, the incorporation documents, notice of situation of registered office,
       information with regard to LLP agreement or any changes made therein and
       information regarding notice of other address of any LLP at which documents
       to be served, are to be kept permanently. Other documents are to be
       maintained for periods ranging from five to eight years.
       79.       Under the ITA, documents must be retained for a period of seven
       years from the end of the relevant year which may get extended till completion
       of assessment if a notice for reopening of assessment is issued in this period.
       The retention period is not affected by possible subsequent events.
       80.      Under PMLA s.12(c),13 documents related to the conduct of
       customer due diligence are to be maintained for a period of ten years from the
13
        Read in conjunction with s.10 of the PMLA Rules.



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      date of the cessation of the transaction between the clients and the banking
      company or financial institution or intermediary, as the case may be. As the
      period of time is determined by the date at which the transaction occurred, the
      retention period is not affected by possible subsequent events.
      81.        Partnerships are not required to keep information on their partners
      within the country though, in order to meet the various registration
      requirements it can be expected that in practice partnerships that (i) have
      income, deductions or credits for tax purposes in India; (ii) carry on business
      in India; or (iii) are formed under Indian laws, do keep such records in India.

      Trusts (ToR A.1.4)
      82.      India allows for the creation and operation of trusts. There are
      thousands of trusts operating in India, though the exact number is not known.
      Commonly, these are established with the assistance of a lawyer or an
      accountant. Trusts fall into one of four categories:
     •    private trusts: to benefit selected persons;

     •    charitable or public trusts (including religious trusts): to benefit the public
          at large;

     •    wakfs: for performing certain Islamic religious activities;

     •    those trusts established under foreign laws which have some activity in
          India.

      83.        The Trusts Act 1882 defines and governs the law relating to private
      trusts and their trustees. A variety of forms of private trusts, including express
      trusts, are recognised. An Indian trust must have one or more settlor, trustee
      and identified beneficiary. The same person may act in all three capacities in
      relation to the trust. A trust in relation to immovable property is valid only if
      declared by a non-testamentary instrument in writing signed by the author of
      the trust or the trustee (a trust deed) or by the will of the author of the trust. If
      however the trust property does not involve immovable property, it may be
      constituted by word of mouth (Trusts Act 1882, s.5). Section 6 of the Trusts
      Act 1882 indicates that a trust is created when the author of the trust indicates
      orally or in writing with reasonable certainty, inter alia, the trustee and
      beneficiary. Read with s.5, this requires that for trusts with underpinning
      deeds or wills, information on the beneficiary be included in that deed.
      84.       Public charitable trusts (which do not strictly require a written
      instrument to be formed) can be established for a number of purposes,
      including the relief of poverty, education, medical relief, provision of facilities


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       for recreation, and any other object of general public utility. Indian public
       trusts are generally irrevocable. No national law (except the broad principles
       of the Trusts Act 1882, which governs private trusts) governs public charitable
       trusts in India, although many States (particularly Maharashtra, Gujarat,
       Rajasthan, and Madhya Pradesh) have public trusts acts, e.g. the Bombay
       Public Trust Act 1950 which is applicable in the States of Maharashtra and
       Gujarat. These acts provide for inspection and supervision of the property
       belonging to public trusts registered under the act, as well as the proceedings
       of the trustees and books of accounts.
       85.        A “wakf” is a charitable Islamic trust that involves “the permanent
       dedication by a person professing Islam of any moveable or immoveable
       property for any purpose recognised by the Muslim law as pious, religious or
       charitable” and is governed by the Wakf Act 1995. Through a written deed,
       the settler appoints a manager for the administration of the wakf for certain
       property and once dedicated the trust is permanent, irrevocable and
       inalienable.
       86.       Article 1 of the Societies Registration Act 1860 provides that any
       seven or more persons associated for any literary, scientific, or charitable
       purpose, may, by subscribing their names to a memorandum of association,
       and filing the same with the Registrar of Joint-stock Companies 2, form
       themselves into a society under the act.
       Information held by Government authorities
       87.       There is no registration requirement for private trusts. It is possible,
       but not mandatory, to register a trust deed for a private trust with the Sub-
       Registrar of Assurances (Registration Act 1908).
       88.       Registration requirements apply to charitable trusts and wakfs, as
       detailed below.
                        Statute                              Registration requirement
         State Public Trust Acts                  Public trusts to which the act applies (public health
                                                  education relief of poverty) must register under s.18.
         e.g. Bombay Public Trust Act 1950

         Wakfs Act 1954                           Every wakf must register at the Board.

                                                  When a trust is constituted as a society, it is required
         Societies Registration Act 1860
                                                  to be registered.

                                                  Charitable or religious trusts, societies and
         Income Tax Act 1961                      companies claiming exemptions under the s.11 and
                                                  s.12AA are required to register.

                                                  Any charitable trust, society, company, desirous o
         Foreign Contribution      (Regulation)
                                                  receiving any foreign contributions from foreign
         Act 1976
                                                  sources, is required to register under s.6(1).




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      89.        For public and charitable trusts that are required to register (as
      shown above), the applicable statutes have requirements relating to the
      information that must be provided and filed annually with the various statutory
      authorities. The registration application form must be accompanied by the
      original trust deed (or a certified copy of the trust deed) when the trust is
      created under an instrument; or documents evidencing the creation of the trust
      where it is created otherwise than under an instrument. For example, every
      wakf has to be registered at the office of the Board of Wakf (s.36) and an
      application for registration must be accompanied by a copy of the wakf deed.
      If there is no deed, the application may instead be accompanied by full
      particulars, as far as they are known to the applicant, of the origin, nature and
      objects of the wakf. The register of wakfs contains inter alia: the wakf deed;
      the name of the mutawalli,14 and, the rule of succession to the office of
      mutawalli under the wakf deed or by custom or by usage.
      90.       For the purposes of assessment under the ITA, trusts may be
      classified as either: (i) public charitable or religious trusts entitled to
      exemption from tax; or (ii) private trusts. ITA s.139(1) requires all persons in
      India who have income over a certain threshold to submit an annual tax return.
      Trusts are considered to be associations of persons under the ITA and are
      assessed for tax on any income above a threshold of INR 160 000
      (EUR 2 811). The relevant tax assessment form requires information on the
      names and addresses of author/founder/trustee/manager and the person who
      has made substantial contribution to the trust. It does not require identification
      of the beneficiaries.
      91.        A trustee is liable to be taxed under ITA s.160 as a “representative
      assessee” in respect of income of the trust. Section 161 of ITA provides
      procedure for representative assessees. Every representative assessee, as
      regards the income in respect of which he is a representative assessee, is
      subject to the same duties, responsibilities and liabilities as if the income were
      income received by or accruing to or in favour of him beneficially, and shall
      be liable to assessment in his own name in respect of that income; but any
      such assessment shall be deemed to be made upon him in his representative
      capacity only, and the tax is levied upon and recovered from him to the same
      extent as it would be leviable upon and recoverable from the person
      represented by him.



14
      As per section 3(i), ‘mutawalli’ includes any person who is a mutawalli of a
      wakf by virtue of any custom or who is appointed by a mutawalli to perform the
      duties of a mutawalli and any person, committee or corporation managing or
      administering any wakf or wakf property.



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       92.       For charitable trusts, ITA s.139(4A) requires every person in receipt
       of income derived from property held under trust or other legal obligation
       wholly or in part for charitable or religious purposes to submit an annual tax
       return. All charitable trusts and wakfs are required to disclose in their income
       tax returns (form ITR7 Schedule L) the names and addresses of
       author/founder/trustee/manager and the person who has made substantial
       contribution to the trust. These returns do not need to identify the
       beneficiaries.
       93.       The ITD also holds information on charitable trusts due to the
       process these trusts observe when applying for tax exemptions. Income
       received by public charitable or religious trusts from property or by way of
       voluntary donations may be exempt from income tax if the income is applied
       to charitable or religious purposes (ITA s.11-s.13). The exemptions are
       subject to a number of conditions, including the requirement that the trust is
       registered for these purposes, and are granted by the tax authorities on
       application with information about the trustees and administration
       requirements of the trust.
       94.       The tax return requirements are the same for trusts created under the
       laws of other jurisdictions that are administered in India or have a trustee
       resident in India, Section 6(4) of the ITA defines residency of “persons”
       (which includes trusts) for the purposes of the ITA very broadly as
       incorporating every person except where during that year the control and
       management of his affairs is situated wholly outside India. information is
       submitted to the ITD in the annual tax returns of the trustees and others who
       derive income from the trust. All persons in India, including settlers, trustees
       and beneficiaries of trusts, who have a total annual income of more than
       INR 160 000 (EUR 2 811) for men, INR 190 000 (EUR 3 338) for women or
       INR 240 000 (EUR 4 217) for persons of 65 years or more are required to
       submit ITR6 tax return form to the ITD.
       95.        While not an absolute requirement, commonly the beneficiaries are
       also identified on the income tax return as income related to trusts where the
       shares of the beneficiaries are unknown or indeterminate (and income of oral
       trusts) are taxed at the maximum marginal rate (s.164 and s.164A).

       Information held by trustees and service providers
96.        For private trusts (including oral trusts), s.19 of the Trusts Act 1882
requires trustees to “keep clear and accurate accounts of the trust-property, and at all
reasonable times, at the request of the beneficiary, to furnish him with full and
accurate information as to the amount and state of the trust-property” and to make
those records available to a beneficiary for inspection (s.57). A trustee of a private
trust which has a trust deed or will is also entitled (though not required) to have in


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his possession that instrument and all the documents of title (if any) relating solely
to the trust-property.

      97.       As private trusts are required to file tax returns, they are as a
      corollary required under the ITA to maintain records for tax purposes. It
      appears that these requirements relate to financial information only and not to
      information on the settlors, trustees or beneficiaries. There are no such
      requirements that trustees or service providers of charitable or public trusts or
      wakfs or trustees of foreign trusts hold information on the settlors, trustees and
      beneficiaries.
      98.        The Charitable and Religious Trusts Act 1920 permits members of
      the public who have an interest in any charitable or religious trust to apply to a
      court to obtain an order directing its trustees to furnish information about the
      trust, including income and assets, and directing that the accounts of the trusts
      to be examined and audited. It appears such orders cannot be used to obtain
      information on the trust’s settlors, trustees and beneficiaries.
      99.         Every banking company, financial institution and intermediary is
      obliged under PMLA s.12(c), to verify and maintain the records of the identity
      of all its clients. The PMLA Rules include more detailed know-your-customer
      rules. Banking companies, financial institutions and financial intermediaries
      must, at the time of opening an account or executing any transaction with it,
      verify and maintain the record of identity and current address or addresses
      including permanent address or addresses of the client, the nature of business
      of the client and his financial status (Rule 9).
      100.       Where the client is a trust, it is required to submit to the banking
      company or financial institution or intermediary, as the case may be, a
      certified copy of: the registration certificate; trust deed; and an officially valid
      document in respect of the person holding an attorney to transact on its behalf.
      In addition, Rule 9(1A) requires all banks, financial institutions and
      intermediaries to “identify the beneficial owner and take all reasonable steps
      to verify his identity.”

      Information held by other persons
101.      Normally lawyers and accountants assist in creation of trusts in India.
However there are no requirements that people in these professions, or others in
India, hold information pertaining to the trust.




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       Documentation retention requirements
       102.      There are no document retention requirements contained in the
       Trusts Act 1882, the Charitable and Religious Trusts Act 1920, the Societies
       Registration Act 1860 or the Wakfs Act 1995.
       103.       Under the ITA (see in particular sections 44AA, 44AB and 271A),
       documents must be retained for a period of seven years from the end of the
       relevant year which may get extended till completion of assessment if a notice
       for reopening of assessment is issued within this period. The retention period
       is not affected by possible subsequent events.
       104.       Under PMLA s.12(c),15 documents related to customer due
       diligence are to be maintained by banking companies, financial institutions
       and financial intermediaries for ten years from the date of the cessation of the
       transaction between the clients and the banking company or financial
       institution or intermediary, as the case may be. As the period of time is
       determined by the date at which the transaction occurred, the retention period
       is not affected by possible subsequent events.
       105.      Information pertaining to trusts is not required to be kept within
       India, but must be available when so requested by the ITD or by India’s
       Financial Intelligence Unit (FIU-IND).

       Foundations (ToR A.1.5)
       106.       India does not have a separate category of foundations, however
       described. Non-profit organisations, which are called “foundations” from time
       to time, are created as companies or as trusts. The requirements pertaining to
       ownership information for these entities have been outlined earlier in this
       report. It is not known what requirements apply to foreign foundations
       operating in India.

       Enforcement provisions to ensure availability of information (ToR
       A.1.6)
       107.     India’s provisions to ensure the availability of information have
       been described previously in this section. They can primarily be found in the
       Companies Act 1956, the Limited Liability Partnership Act 2008, the Income-
       tax Act 1961, the Prevention of Money Laundering Act 2002 and the rules
       underpinning these acts.


15
        Read in conjunction with s.10 of the PMLA Rules.



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      108.       Non-compliance with the provisions of the Companies Act 1956 is
      viewed seriously. Fines may be levied and penal action may in some
      instances be taken in accordance with Part XIII of the Companies Act 1956.
      Penalties are available for a wide range of forms of non-compliance by
      relevant individuals, Indian and foreign companies with provisions of the act
      (e.g. s.598, s.628, s.629, s.631). Relatively low penalties are available for a
      foreign companies which fail to comply with any obligations contained in the
      act; fines of INR 10 000 (EUR 176) plus INR 1 000 (EUR 17.57) per day.
      Indian companies which provide false or incomplete information when
      fulfilling their obligations under the act are subject to fines of INR 5 000
      (EUR 88) plus INR 500 (EUR 8.79) per day plus imprisonment for up to two
      years. In 2009, the government proposed amendments to the Companies Act
      1956 which, inter alia, establish both minimum and maximum fines and
      imprisonment and generally raise the quantum of the fines/imprisonment
      available for non-compliance with the act.
      109.       Where false documentation is filed as part of registration of a LLP,
      in accordance with the Limited Liability Partnership Act 2008, fines ranging
      from INR 10 000 to INR 500 000 (EUR 176 to EUR 8 785) may be levied and
      prosecutions may be launched. A good range of penalties is thus available to
      authorities in these circumstances. However, non-compliance with the
      requirements to notify the Companies Registrar of changes in partners’ details
      may be subject to fines from INR 2 000 to INR 25 000 (EUR 35 to EUR 439).
      110.      Under PMLA s.13, the Director of the FIU-IND may call for records
      and may make such inquiry or cause such inquiry to be made, as he thinks fit.
      If the Director, in the course of any inquiry, finds that a banking company,
      financial institution or an intermediary or any of its officers has failed to
      comply with the provisions under the act, then s/he may, by an order, levy a
      fine on such banking company or financial institution or intermediary which
      shall not be less than INR 10 000 (EUR 176) but may extend to INR 100 000
      (EUR 1 757) for each failure.
      111.       Under the ITA, administrative penalties of small amounts apply to
      natural and legal persons who do not comply with requests for information.
      Any person who fails to furnish information in due time may be subject to a
      fine of INR 100 (EUR 1.75) per day for every day the failure to provide
      information continues (ITA s.272A). Any person who fails to give evidence
      or produce books of account or other documents as required under summons
      under s.131 or who omits to attend or produce books of account or documents
      as required under summons under s.131, may be subject to a fine of
      INR 10 000 (EUR 176). In practice, such fines are rarely levied and non-
      compliance with a summons issued under s.131 will lead to exercise of search
      and seizure powers under s.132(1)(a). As taxpayers are aware of the
      possibility that a summons will be issued, this has dissuasive value.



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       112.      If a person makes a statement in any verification under the ITA or
       the Income-Tax Rules 1962, or delivers an account or statement which is false,
       and which s/he either knows or believes to be false, or does not believe to be
       true, under ITA s.277 s/he may be prosecuted. Similarly, wilful failure to
       submit a tax return which relates to payment of less than INR 100 000
       (EUR 1 757) in tax is punishable by imprisonment of between three months
       and three years plus a fine. If the wilful failure relates to a tax liability above
       that threshold, it is punishable by imprisonment of between six months and
       seven years plus a fine.
       113.      The effectiveness of the enforcement provisions which are in place
       in India will be considered as part of the Phase 2 review.
       114.      ITD officers also have wide-ranging powers, including compulsory
       powers, to obtain information from natural and legal persons, which are
       detailed below in section B of this report.

       Determination and factors underlying recommendations
                                                Determination
          The element is in place.



A.2. Accounting records

          Jurisdictions should ensure that reliable accounting records are kept for al
          relevant entities and arrangements.


       General requirements (ToR A.2.1)

       Companies
       115.       Companies are required to keep at their registered offices - or
       elsewhere in India if the Companies Registrar is so advised - books of account
       detailing (Companies Act 1956, s.209):
      •     all sums of money received and expended by the company and the matters
            in respect of which the receipt and expenditure take place;

      •     all sales and purchases of goods by the company;

      •     the assets and liabilities of the company; and



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     •    the costs of labour and materials (for companies engaged in production,
          processing, manufacturing or mining activities).

      116.       These books of account must give a true and fair view of the state of
      the affairs of the company or branch office, as the case may be, and to explain
      its transactions (s.209(3)).
      117.       The books of account pertaining to branch offices, regardless of
      whether the office is within or outside India, are to be kept at that branch
      office, with the registered office holding quarterly summarised returns relating
      to the branch office (s.209(2)).
      118.      These requirements under the Companies Act 1956 to keep
      accounting records are applicable to all companies registered under that act.
      Section 600(3)(a) provides that s.209 of the act (which concerns the obligation
      to maintain books of accounts) applies to foreign companies. For foreign
      companies, such books of account must be kept at the principal place of
      business in India and must cover monies received and expended, sales and
      purchases made, and assets and liabilities related to the business in India
      119.      The Companies Act 1956 goes on to provide that these books of
      account, and other books and papers, must be available for inspection by the
      relevant Companies Registrar, the Securities and Exchange Board of India or
      other officer as authorised by the Central Government (s.209A(1)). Every
      director, officer and employee of the company is required to provide all
      assistance to such inspectors and to produce to the inspectors all books of
      account and other books and papers of the company in his/her custody or
      control and to provide any statement, information or explanation asked of
      him/her (s.209A(2)-s.209A(3)). The inspectors have broad powers to
      summons people, require production of documents, inspect documents
      pertaining to the company at any location. Penalties exists for non-
      compliance with an inspection; fines of at least INR 50 000 (EUR 878),
      imprisonment for up to one year and disqualification from holding office in
      any company for up to five years.
      120.      In addition to the requirements detailed in the Companies Act 1956,
      all companies are obliged to submit an income tax return in a prescribed for to
      the ITD (ITA s.139), regardless of whether they have made a profit or not in
      the given year. Rule 12 of the Income-Tax Rules 1962 and tax return form
      ITR6 (for companies) require that the annual tax return include a balance sheet
      and profit and loss account. The required details are such that they enable the
      financial position of the company to be determined and they allow financial
      statements to be prepared. The information required for this form is not such
      that it would correctly explain the company’s transactions, though this
      information would exist with service providers in accordance with anti-money
      laundering provisions.


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       121.       ITA s.44AA requires that persons carrying on legal, medical,
       engineering or architectural profession or the profession of accountancy or
       technical consultancy or interior decoration or any other profession as notified
       by the Board in the Official Gazette, keep and maintain sufficient books of
       account and other documents to enable the assessing officer to calculate
       his/her total income. This obligation applies when the total income the person
       derives from the business exceeds INR 120 000 (EUR 2 108) or his/her total
       sales/turnover/gross receipts exceeds INR 10 000 (EUR 176) in any one of the
       last three years.
       122.       With respect to these specified professions, and also to any
       authorised representatives or film artists, the types of records to be maintained
       at the principal place of business are specified in Rule 6F of the Income-Tax
       Rules 1962. These are:
      •     a cash book;

      •     a journal, if the accounts are maintained according to the mercantile
            system of accounting;

      •     a ledger;

      •     carbon copies of bills, whether machine numbered or otherwise serially
            numbered, wherever such bills are issued by the person, and carbon copies
            or counterfoils of machine numbered or otherwise serially numbered
            receipts issued by him (for sums of over INR 25 (EUR 0.44));

      •     original bills wherever issued to the person and receipts in respect of
            expenditure incurred by the person or, where such bills and receipts are
            not issued and the expenditure incurred does not exceed INR 50
            (EUR 0.88), payment vouchers prepared and signed by the person; and

      •     a daily case register and a stock inventory (medical professionals only).

       123.      It is clear that all companies registered under the Companies Act
       1956 are required to keep books of account which correctly explain all
       transactions, enable the company’s financial position to be determined with
       reasonable accuracy at any time and which allow for financial statements to be
       prepared. In addition, the requirements of the ITA ensure that annual tax
       returns are filed which enable the financial position of the company to be
       determined and they allow financial statements to be prepared. Also, certain
       professional persons (who may also have their professional activities
       registered as companies) keep accounts which correctly explain all
       transactions, enable the company’s financial position to be determined with


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      reasonable accuracy at any time and which allow for financial statements to be
      prepared.
      124.       Section 594 provides that every foreign company is required to
      make out a balance sheet and profit and loss account and file with the
      concerned Registrar of Companies annually. Further, s.600(3)(a) states that
      provisions of s.209 (i.e. for maintenance of books of accounts) apply to a
      foreign company to the extent of requiring it to keep at its principal place of
      business in India the books of account, with respect to moneys received and
      expended, sales and purchases made, and assets and liabilities, in the relation
      to its business in India.
      Co-operative societies
      125.       Co-operative societies which are engaged in specified economic
      activities are considered to be associations of persons under the ITA and are
      assessed for tax on a sliding scale (see paragraph 24). The ITA and the
      Income-Tax Rules 1962 (ITA Rules)provide that co-operative societies must
      submit detailed accounts as part of their annual tax returns. In addition,
      persons who gain income from a co-operative society are obliged to report this
      income in their annual tax returns.

      Partnerships
      126.       As mentioned previously in this report, general partnerships are
      required to register as such, in accordance with the Partnership Act 1932.
      That act does not establish obligations with respect to maintaining accounting
      records. Section 9 does, however, require that partners render true accounts
      and full information of all things affecting the firm to any partner, his heir or
      legal representative.
      127.       Under s.34 of Limited Liability Partnership Act 2008, books of
      accounts are required to be maintained at the registered office of the LLP. In
      addition, every year a statement of accounts and solvency is required to be
      filed with the Companies Registrar. This act also grants broad powers to the
      registrar to request information and conduct inspections.
      128.      Further, Rule 24 of the Limited Liability Partnership Rules 2009
      provides that a LLP must keep books of accounts which show and explain the
      LLP’s transactions, which disclose with reasonable accuracy, at any time, the
      financial position of the LLP at that time; and which enable the designated
      partners to ensure that any statement of account and solvency prepared
      complies with the requirements of the act. These books of account must
      contain:
     •    particulars of all sums of money received and expended by the LLP and
          the matters in respect of which the receipt and expenditure takes place;


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      •     a record of the assets and liabilities of the LLP;

      •     statements of cost of goods purchased, inventories, work in progress,
            finished goods and cost of goods sold; and

      •     any other particulars which the partners may decide.

       129.     Foreign LLPs are required to file statements of account and
       solvency within 30 days of expiry of six months from the close of financial
       year.
       130.       Partnerships, including general partnerships and foreign
       partnerships, are considered to be “firms” for the purpose of the ITA and must
       therefore submit an annual return to the ITD (ITA s.139(1)(a)). The required
       tax return form - ITR5 - requires submission of the balance sheet and also
       profit and loss account information.
       131.       Individual partners must also submit annual returns as every natural
       person in India whose total annual income exceeds INR 160 000 (EUR 2 811),
       or INR 190 000 (EUR 3 338) for women or INR 240 000 (EUR 4 217) for
       persons of 65 years or more, is obliged to submit an income tax return in a
       prescribed form to the ITD (ITA s.139). Rule 12 of the Income-Tax Rules
       1962 and tax return form ITR3 (for partners in a firm) require that the annual
       tax return includes a balance sheet and profit and loss account. The required
       details are such that they enable the financial position of the partner, but not
       the partnership, to be determined. The information required for this form is
       not such that it would allow the financial statements to be prepared, or
       correctly explain the company’s transactions.
       132.       In addition, ITA s.44AA requires that persons carrying on legal,
       medical, engineering or architectural profession or accountancy or technical
       consultancy or interior decoration or any other profession as notified by the
       Board in the Official Gazette, keep and maintain sufficient books of account
       and other documents to enable the assessing officer to calculate his/her total
       income. This obligation applies when the total income the person derives
       from the business exceeds INR 120 000 (EUR 2 108) or his/her total
       sales/turnover/gross receipts exceeds INR 10 000 (EUR 176) in any one of the
       last three years. This is further elaborated in Rule 6F of the Income-Tax Rules
       1962, which requires these professionals, and also authorised representatives
       or film artists, to maintain inter alia:
      •     copies of bills wherever such bills are issued by the person, and copies or
            counterfoils of receipts issued by him (for sums of over INR 25
            (EUR 0.44));



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     •    original bills issued to the person and receipts in respect of expenditure
          incurred by the person or, where such bills and receipts are not issued and
          the expenditure incurred does not exceed INR 50 (EUR 0.88), payment
          vouchers prepared and signed by the person; and

     •    a daily case register and a stock inventory (medical professionals only).

      133.      Similarly, s.44AB requires persons carrying on a business or a
      profession with turnover above a specified threshold to have their accounts
      audited annually by an accountant and to provide a copy of the audit report to
      the ITD.
      134.      The obligations for LLPs under the Limited Liability Partnership
      Act 2008 and the requirements for all types of partnerships under the ITA
      ensure that firms and partners in firms or persons in certain professions
      deriving income from LLPs keep accounts in India which correctly explain all
      transactions, enable the company’s financial position to be determined with
      reasonable accuracy at any time and which allow for financial statements to be
      prepared.
      Trusts
      135.       According to s.19 of the Trusts Act 1882, a trustee is bound: (i) to
      keep clear and accurate accounts of the trust-property; and (ii) at all reasonable
      times, at the request of the beneficiary, to furnish him with full and accurate
      information as to the amount and state of the trust-property. In addition, the
      beneficiary has, under s.57 of the Trusts Act 1882, a right, as against the
      trustee and all persons claiming under him with notice of the trust, to inspect
      and take copies of the instrument of trust, the documents of title relating solely
      to the trust-property, the accounts of the trust-property and the vouchers (if
      any) by which they are supported and the cases submitted and opinions taken
      by the trustee for his guidance in the discharge of his duty. Thus, it could be
      expected that trustees keep reliable accounting records in order to fulfil their
      role and their obligations to beneficiaries.
      136.       Trusts are considered to be associations of persons under the ITA
      and are assessed for tax on any income above a threshold of INR 160 000
      (EUR 2 811). In addition, each natural person in India who has earnt money
      related to the trust is obliged to file an income tax return in a prescribed for to
      the ITD if their annual income exceeds INR 160 000, or INR 190 000
      (EUR 3 338) for women and INR 240 000 (EUR 4 217) for persons of 65
      years or more, is obliged to submit an income tax return (ITA s.139). Rule 12
      of the Income-Tax Rules 1962 and tax return forms ITR1 and ITR2 (for
      individuals) require that the annual tax return include information on all
      income, which should include income gained from a trust.



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       137.       The return is required even where the person expects to receive a tax
       exemption on the grounds that the income is applied to charitable or religious
       purposes (ITA s.11-s.13). Under s.12A, income of a charitable trust (having
       income above the exempt threshold limit) is not exempt unless the accounts of
       the trust are audited and the audit report is submitted along with the annual tax
       return.
       138.       Also, ITA s.44AA requires that persons carrying on legal, medical,
       engineering or architectural profession or the profession of accountancy or
       technical consultancy or interior decoration or any other profession as notified
       in the Official Gazette, keep and maintain sufficient books of account and
       other documents to enable the assessing officer to calculate his/her total
       income. This obligation applies when the total income the person derives
       from the business exceeds INR 120 000 (EUR 2 108) or his/her total
       sales/turnover/gross receipts exceeds INR 10 000 (EUR 176) in any one of the
       last three years. This is further elaborated in Rule 6F of the Income-Tax Rules
       1962, which requires these professionals, and also authorised representatives
       or film artists, to maintain inter alia:
      •     copies of bills wherever such bills are issued by the person, and copies or
            counterfoils of receipts issued by him (for sums of over INR 25
            (EUR 0.44));

      •     original bills issued to the person and receipts in respect of expenditure
            incurred by the person or, where such bills and receipts are not issued and
            the expenditure incurred does not exceed INR 50 (EUR 0.88), payment
            vouchers prepared and signed by the person; and

      •     a daily case register and a stock inventory (medical professionals only).

       139.      ITA s.44AB further requires persons carrying on a business or a
       profession with turnover above a specified threshold to have their accounts
       audited annually by an accountant and to provide a copy of the audit report to
       the ITD.
       140.      The ITA and the ITA Rules provide that trusts must submit detailed
       accounts as part of their annual tax returns. The requirements of the ITA
       ensure that trustees who are accountants (or one of the other types of specified
       professionals) keep accounts which correctly explain all transactions, enable
       the company’s financial position to be determined with reasonable accuracy at
       any time and which allow for financial statements to be prepared. This
       obligation is somewhat limited in that it only applies to certain professionals
       and only when that professional derives income above a certain threshold
       (s.44AA and s.44AB). Persons who gain income from a trust are obliged to



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      report this income in some detail in their annual tax returns, though such
      information would not be sufficient to explain all transactions, the financial
      position and the financial statements for the trust itself. The Indian authorities
      indicate that although it appears there could be a gap in the coverage of
      s.44AA and s.44AB, because they apply to a list of types of professionals, in
      fact these provisions are interpreted broadly and all persons comply with these
      requirements to keep and submit accounting records.

      Foundations
      141.       India does not have a separate category of foundations, however
      described. Non-profit organisations, which are called ‘foundations’ from time
      to time, are created as companies or as trusts. The requirements pertaining to
      ownership information for these entities have been outlined earlier in this
      report.

      Underlying documentation (ToR A.2.2)

      Companies
      142.       The Companies Act 1956 provides that the books of account which
      companies are obliged to keep must be accompanied by other ‘books and
      papers’. Section 2(2) of the act defines ‘book and paper’ as a broad category
      including ‘accounts, deeds, vouchers, writings and documents’. As a result,
      companies are obliged to keep underlying documentation reflecting details of
      (i) all sums of money received and expended and the matters in respect to
      which the receipt and expenditure takes place; and (ii) all sales, purchases and
      other transactions; and (iii) the assets and liabilities of the company.
      143.      Further, ITA s.44AA, obliges persons carrying on certain
      professions - legal, medical, engineering or architectural profession or the
      profession of accountancy or technical consultancy or interior decoration or
      any other profession as notified by the Board in the Official Gazette - to keep
      and maintain sufficient books of account. ‘Other documents’ must also be
      kept to enable the assessing officer to compute his total income in accordance
      with the provisions of the ITA. For other professions, similar requirements
      arise when the person’s income from the business or profession exceeds
      INR 120 000 (EUR 2 108). Rule 6F of the Income-Tax Rules 1962 goes on to
      explain that these documents must include:
     •    a cash book;

     •    a journal, if the accounts are maintained according to the mercantile
          system of accounting;


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      •     a ledger;

      •     carbon copies of bills, whether machine numbered or otherwise serially
            numbered, wherever such bills are issued by the person, and carbon copies
            or counterfoils of machine numbered or otherwise serially numbered
            receipts issued by him (for sums of over INR 25 (EUR 0.44));

      •     original bills wherever issued to the person and receipts in respect of
            expenditure incurred by the person or, where such bills and receipts are
            not issued and the expenditure incurred does not exceed INR 50
            (EUR 0.88), payment vouchers prepared and signed by the person; and

      •     a daily case register and a stock inventory (medical professionals only).

       144.       The ITA provisions ensure that persons, companies and firms
       (which includes trusts) involved in these sectors keep underlying
       documentation for the accounting records, such as invoices, contracts etc.
       detailing: (i) all sums of money received and expended and the matters in
       respect to which the receipt and expenditure takes place; and (ii) all sales,
       purchases and other transactions. While it is not clear that the ITA requires
       companies in these sectors to keep underlying documentation reflecting details
       of the assets and liabilities of the company, such an obligation is clearly in
       place under s.2(2) of the Companies Act 1956, described above.

       Co-operative societies
       145.        Co-operative societies are required under the ITA and Rule 6F of
       the Income-Tax Rules 1962 to keep underlying documentation for the
       accounting records, such as invoices, contracts etc. detailing: (i) all sums of
       money received and expended and the matters in respect to which the receipt
       and expenditure takes place; and (ii) all sales and purchases and other
       transactions. Co-operative societies are obliged to use the form ITR7 when
       filing their income tax returns and this form seeks details of the assets and
       liabilities of the trust.
       146.      Under the ITA, documents must be retained for a period of seven
       years from the end of the relevant year which may get extended till completion
       of assessment if a notice for reopening of assessment is issued within this
       period. The retention period is not affected by possible subsequent events.
       There is no requirement that these records be kept within India. However, if
       asked by the ITD, documents must be produced in due time (ITA s.272A).




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      Partnerships
      147.      The Partnership Act 1932 does not establish obligations for general
      partnerships with respect to maintaining underlying documents.
      148.     With respect to LLPs, Rule 24(1) of the Limited Liability
      Partnership Rules 2009 provides:
      Every limited liability partnership shall keep books of accounts which are
      sufficient to show and explain the limited liability partnership’s transactions
      and are such as to:
      (a) disclose with reasonable accuracy, at any time, the financial position of
      the limited liability partnership at that time; and
      (b) enable the designated partners to ensure that any Statement of Account
      and Solvency prepared under this rule complies with the requirements of the
      Act.

      149.      These rules do not clearly require that underlying documentation be
      kept, nor do they define “books of accounts”. The rules note that terms which
      are not defined take the same meaning as indicated in the Limited Liability
      Partnership Act 2008. That act does not define “books of accounts” but notes
      that terms which are not defined in the act take the same meaning as indicated
      in the Companies Act 1956. The Companies Act 1956 does not define “books
      of accounts”, but does define “book and paper” as a broad category including
      “accounts, deeds, vouchers, writings and documents”. Indian authorities rely
      on this definition as indicating that underlying documentation must be kept for
      LLPs.
      150.      In addition, as noted previously, the ITA and Rule 6F of the Income-
      Tax Rules 1962, oblige partnerships to keep underlying documentation for the
      accounting records, such as invoices, contracts etc. detailing: (i) all sums of
      money received and expended and the matters in respect to which the receipt
      and expenditure takes place; and (ii) all sales and purchases and other
      transactions.

      Trusts
      151.      There are no requirements under the Trusts Act 1882 that trustees or
      others associated with a trust keep underlying documentation related to the
      assets and liabilities of the trusts such as invoices and contracts.
      152.       As for companies, co-operative societies and partnerships, the ITA
      and Rule 6F of the Income-Tax Rules 1962 oblige firms (including trusts) and
      persons being assessed for the income of a trust to keep underlying
      documentation for the accounting records, such as invoices, contracts etc.
      detailing: (i) all sums of money received and expended and the matters in


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       respect to which the receipt and expenditure takes place; and (ii) all sales and
       purchases and other transactions. Trusts are obliged to use the form ITR7
       when filing their income tax returns and this form seeks details of the assets
       and liabilities of the trust.
       153.       Under the ITA (see in particular sections 44AA, 44AB and 271A),
       documents must be retained for a period of seven years from the end of the
       relevant year which may get extended till completion of assessment if a notice
       for reopening of assessment is issued within this period. The retention period
       is not affected by possible subsequent events. There is no requirement that
       these records be kept within India. However, if asked by the ITD, documents
       must be produced in due time (ITA s.272A).

       Foundations
       154.       India does not have a separate category of foundations, however
       described. Non-profit organisations, which are called ‘foundations’ from time
       to time, are created as companies or as trusts. The requirements pertaining to
       ownership information for these entities have been outlined earlier in this
       report.

       Document retention (ToR A.2.3 and A.2.4)

       Companies
       155.       The accounting records specified in Companies Act 1956 must be
       retained in India for a period of eight years (s.209(4)(a)). The retention period
       is not affected by the liquidation of the company or termination of a business
       relationship (see in particular s.550).
       156.       For certain legal persons involved in specified professions - legal,
       medical, engineering, architecture, accountancy, technical consultancy,
       interior decoration, authorised representative or film artist - ITA s.44AA and
       Rule 6F of the Income-Tax Rules 1962 require that books of account and other
       specified documents be kept and maintained for six years from the end of the
       relevant assessment year. As these requirements apply to persons “carrying
       on” these types of business, it could be argued that they do not apply to
       persons no longer carrying on the business. As such, the retention period is
       likely affected by possible subsequent events. Rule 6F specifically requires
       that these books of account and other documents be kept by the person “at the
       place where he is carrying on the profession or, where the profession is carried
       on in more places than one, at the principal place of his profession”. As such,
       they are in most cases kept within India (see s.209 and s.600(3)(a)).



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      157.      Where accounting information is required to be kept in respect of a
      company by a person other than a government authority, it is required to be
      kept within India.
      Partnerships
      158.       Rule 24(3) of the Limited Liability Partnership Rules 2009, which is
      further detailed in Annexures ‘B’ and ‘C’ to the Rules, provides that LLPs
      must keep their books of account for eight years from the date on which they
      are made. As noted above, these rules do not clearly require that underlying
      documentation be kept, nor do they define ‘books of accounts’. The rules
      point to a definition of ‘book and paper’ in the Companies Act 1956 ‘which
      covers ‘accounts, deeds, vouchers, writings and documents’.             Indian
      authorities rely on this definition as indicating that underlying documentation
      must be kept for LLPs for eight years from the date on which they are made.
159.    Section 34 of the Limited Liability Partnership Act 2008, read with the
Limited Liability Partnership Rules 2009, provides for preservation of statement of
account and solvency at the registered office in India.

      160.      Under the ITA, the accounting books and underlying records must
      be retained. The books of account and other documents specified in Rule 6F
      of the Income-Tax Rules 1962 must be kept and maintained for six years from
      the end of the relevant assessment year. It is not specified whether this
      information must be kept within India.

      Trusts
      161.      As for companies and partnerships, the ITA and Rule 6F of the
      Income-Tax Rules 1962 oblige trusts and persons being assessed for the
      income of a trust to keep accounting records and underlying documentation
      for the accounting records for a period of six years from the end of the
      relevant year, which may get extended till completion of assessment if a notice
      for reopening of assessment is issued within this period. These accounts
      would have to be maintained by the person assessed for the income.
      Normally, this would be the trustee, though in some cases it could be the
      beneficiary.

      Foundations
      162.       India does not have a separate category of foundations, however
      described. Non-profit organisations, which are called “foundations” from time
      to time, are created as companies or as trusts. The requirements pertaining to
      ownership information for these entities have been outlined earlier in this
      report.



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       Determination and factors underlying recommendations
                                                Determination
          The element is in place.



A.3. Banking information

          Banking information should be available for all account-holders.


       Record-keeping requirements (ToR A.3.1)
       163.       Every banking company, financial institution and intermediary is
       obliged under s.12(c) of the PMLA, to verify and maintain the records of the
       identity of all its clients. The PMLA Rules include more detailed know-your-
       customer rules. Under Rule 9, every banking company, financial institution
       and intermediary must at the time of opening an account or executing any
       transaction with it, verify and maintain the record of identity and current
       address or addresses including permanent address or addresses of the client,
       the nature of business of the client and his financial status.
       164.       Section 12 of the PMLA and Rules 3 and 4 of the PMLA Rules, as
       amended by a Ministry of Finance Notification issued 12 February 2010,
       oblige all banks, financial institutions and financial intermediaries to maintain
       records of all transactions for ten years from the date of the transaction and to
       furnish such information to the Director of the FIU-IND. Where these
       transaction records are required, the records must contain information on:
      •     the nature of the transactions;

      •     the amount and type of currency of the transaction;

      •     the date of transaction; and

      •     the parties to the transaction.


       Determination and factors underlying recommendations
                                                Determination
          The element is in place.




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B.        Access to Information


Overview

       165.       A variety of information may be needed in a tax enquiry and
       jurisdictions should have the authority to obtain all such information. This
       includes information held by banks and other financial institutions as well as
       information concerning the ownership of companies or the identity of interest
       holders in other persons or entities, such as partnerships and trusts, as well as
       accounting information in respect of all such entities. This section of the
       report examines whether India’s legal and regulatory framework gives the
       authorities access powers that cover the right types of persons and information
       and whether rights and safeguards would be compatible with effective
       exchange of information.
       166.       ITD officers have wide-ranging powers, including compulsory
       powers, to obtain information from natural and legal persons. These powers
       are contained in ITA s.131-s.134. They provide the ability to obtain
       information held by banks, other financial institutions, and any person acting
       in an agency or fiduciary capacity including nominees and trustees of
       domestic or foreign trusts, as well as information regarding the ownership of
       companies, partnerships, trusts, foundations, and other relevant entities
       including, to the extent that it is held in India by these persons, ownership
       information on persons in an ownership chain. Further, these powers include
       the ability to obtain accounting records from all natural and legal persons.
       167.     The powers may be exercised in response to an EoI request. There
       is no requirement that the income be related to India, nor is there a
       requirement that the suspicion be of income concealed from the Indian
       government.
       168.       No bank secrecy or corporate secrecy provisions in India’s laws
       would limit the ability of the competent authority to respond to an EoI request.
       The rights and safeguards that apply to persons in India are compatible with
       effective exchange of information.




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B.1.      Competent Authority’s ability to obtain and provide information

       • Competent authorities should have the power to obtain and provide
         information that is the subject of a request under an exchange of information
         arrangement from any person within their territorial jurisdiction who is in
         possession or control of such information (irrespective of any legal
         obligation on such person to maintain the secrecy of the information).

        Ownership and identity information (ToR B.1.1) and accounting
        records (ToR B.1.2)
        169.      The competent authority, when requested by a foreign counterpart,
        can seek information from the ITD, which has powers under the ITA to obtain
        such information.
        170.      Under s.131(1) of the ITA, assessing officers - as well as the Deputy
        Commissioner (Appeals), the Joint Commissioner, Chief Commissioner or
        Commissioner, and the Dispute Resolution Panel - have the same powers as
        vested in a Court under the Civil Code of Procedure 1908. That is, the powers
        of: discovery and inspection; enforcing attendance of and examining under
        oath any person (including any officer of a bank); compelling production of
        books of account and other documents; and issuing commissions.16 Where
        documents have been produced, these ITD officials may impound them and
        retain them. In addition, additional specified senior staff of the ITD and
        authorised officers may use such powers when they suspect that any income
        has been concealed, or is likely to be concealed, by any person or class of
        persons, within their jurisdiction (s.131(1A)).
        171.       The ITD also has powers under s.132 to search any building, place,
        vessel, vehicle or aircraft where he has reason to suspect that such books of
        account, other documents, money, bullion, jewellery or other valuable article
        or thing are kept; search of persons; and seizure of documents, records and
        valuable items. The search and seizure powers under s.132 may not be
        directly used to satisfy an EoI requests as they may only be used when the
        officers of the ITD suspect that the relevant information/items has not been or
        would not be disclosed in accordance with the ITA. However, these search
        and seizure powers may be exercised whenever a summons issued under s.131
        has not been complied with. The s.132 powers have been applied in the past
        to enforce a summons issued pursuant to an EOI request.


16
        By issuing commissions, an ITD officer located at one place can authorise
        another officer located at another location to exercise the powers on behalf. If
        A issues commission to B, B is entitled to same power as A for the purpose of
        investigation, enquiry, recording statements, etc.



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       172.       In terms of businesses, including banks, s.133A provides that the
       Assessing Officer, the Deputy Commissioner (Appeals), the Joint
       Commissioner or the Commissioner (Appeals) may, for the purposes of the
       act, require any person, including a banking company or any officer thereof, to
       furnish information, or to furnish statements of accounts and affairs
       considered useful for, or relevant to, any enquiry or proceeding under the act.
       These powers may also be exercised by the Director-General, the Chief
       Commissioner, the Director and the Commissioner. And s.133B gives these
       senior tax officials the power to enter premises at which a profession is carried
       on and require the proprietor or any employee to furnish information. Finally,
       s.134 empowers this same group of senior tax officials, or anyone authorised
       by them, to inspect and take copies of any register of the members, debenture
       holders or mortgagees of any company or of any entry in such register.
       173.       Any of the officers specified in s.131 or s.133-s.134 can be
       requested by the competent authority to obtain the information and the said
       officer is bound by such direction. The competent authority is part of the
       Central Board of Direct Taxes, which does not have power to obtain
       information directly. The ITA (s.116) designates the income-tax authorities in
       India which have responsibility for administration of the act, including; the
       Central Board of Direct Taxes, the Directors-General of Income-tax or Chief
       Commissioners of Income-tax; and the Directors of Income-tax or
       Commissioners of Income-tax or Commissioners of Income-tax (Appeals).
       Under ITA s.119(1), the Board may issue orders, instructions and directions to
       other income tax authorities as it may deem fit for the proper administration of
       the act, and such authorities and all other persons employed in the execution
       of the act, must observe the orders, instructions and directions of the Board.
       As a result, the Board can direct the income tax authorities who have power to
       obtain information to do so in order to answer a request for information
       received under a DTC as obtaining such information are for the purpose of the
       act and for proper administration of the act.
       174.       When asking banks for information, the ITD commonly includes in
       its request the name of the bank, the address of the branch, the name of the
       account holder and the relevant account number(s), if available. The address
       of the account holder may also be included in the request, though this is
       considered not necessary if all other details are known and included. This
       level of specificity is not required but has become the norm in India as case
       law exists which forbids the ITD from conducting ‘roving enquiries’
       (effectively fishing expeditions). For example, such a request for information
       can be successfully made to and answered by the relevant financial institution
       where the ITD has the details of the account number but not the name of the
       account holder.




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      175.       The above powers of the ITD are exercised by an assessing
      officer/investigating officer when so requested by the competent authority.
      The competent authority is part of the Central Board of Direct Taxes (the
      Board) and the Board is an income-tax authority (s.116 ITA). The Board does
      not have power to obtain information directly. However, under s.119(1), the
      Board may, from time to time, issue such orders, instructions and directions to
      other income-tax authorities as it may deem fit for the proper administration of
      the act, and such authorities and all other persons employed in the execution
      of the act must observe the orders, instructions and directions of the Board.
      So, the Board can direct other income-tax authorities who have power to
      obtain information to obtain such information for exchange of information
      purpose under agreements signed in accordance with s.90, as obtaining such
      information are for the purpose of the ITA and for proper administration of the
      act. The competent authority, being part of the Board, thus has the power to
      direct the officers of the ITD to collect information for providing to other
      countries with which there is an agreement under s.90.
      176.      There are no limitations on these powers, other than due process and
      the requirement that the ITD only exercise its powers in order to progress
      matters related to its functions.
      177.      In India, there is no distinction drawn between civil and criminal
      matters as far as taxation is concerned. Therefore, the relevant exchange of
      information article in double taxation conventions signed by India may be
      used to obtain information to look into both civil and criminal tax matters.
      There is no need for India to have a domestic tax interest in the matter .
      178.       In terms of the powers themselves, the ability to gather information
      from legal persons (s.133-s.134) arises whenever the information is considered
      useful for, or relevant to, any enquiry or proceeding under the act. The powers
      under s.131 of: discovery and inspection; enforcing attendance of and
      examining under oath any person (including any officer of a bank);
      compelling production of books of account and other documents; and issuing
      commissions are vested in specified senior officials of the ITD, and may also
      be used by another class of senior staff when they suspect that any income has
      been concealed, or is likely to be concealed, by any person or class of persons,
      within his jurisdiction, and is making enquiries or conducting an investigation
      related to suspicion.
      179.       These powers can be used to obtain information from any natural or
      legal person in India, including for example from persons who are trustees for
      foreign trusts which are administered in India.
      180.      The ITD is not required to follow any special procedures in order to
      exercise these powers. Reference to a court or other authority is not required.




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       Use of information gathering measures absent domestic tax interest
       (ToR B.1.3)
       181.      The ability to gather information from legal persons (s.133-s.134)
       arises whenever the information is considered useful for, or relevant to, any
       enquiry or proceeding under the act. EOI requests may be classified as either
       enquiries or proceedings under this act. The situations in which the powers
       under s.131 may be exercised are not defined and thus can be expected to be
       very broad.
       182.       There is no requirement that the income be related to India, nor is
       there a requirement that the suspicion be of income concealed from the Indian
       government. Similarly, assuming EoI requests are classified as enquiries or
       proceedings under the act, there is no domestic tax interest limitation on the
       exercise of the power to gather information from legal persons (s.133-s.134).

       Compulsory powers (ToR B.1.4)
       183.       As described above, the ITD has wide-ranging powers to compel the
       production of information from natural and legal persons. Under ITA s.131,
       ITD officers have powers of discovery and inspection; enforcing attendance of
       and examining under oath any person (including any officer of a bank);
       compelling production of books of account and other documents; and issuing
       commissions. Under s.133A ITD officers may require any person, including a
       banking company or any officer thereof, to furnish information and statements
       of accounts and affairs. And s.133B gives these senior tax officials the power
       to enter premises at which a profession is carried on and require the proprietor
       or any employee to furnish information.

       Secrecy provisions (ToR B.1.5)
       184.       The scope of bank secrecy in India has generally followed the
       common law principles, though it is also specifically laid out in s.45E of the
       Reserve Bank of India Act 1934, which prohibits disclosure of credit
       information held by banks except in the prescribed circumstances. Section 22
       of the Credit Information Companies (Regulation) Act 2005 allows access to
       credit information in the possession or control of credit information company
       or credit information institution or specified user, if the access is authorised by
       any law currently in force. Since s.133 of the ITA authorises income tax
       authorities to access credit information from any person, the ITA overrides
       s.45E of the Reserve Bank of India Act 1934.
       185.     In addition, through a circular issued to the banking sector on
       11 February 2008, the Reserve Bank of India confirmed that the bankers'



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      obligation to maintain secrecy arises out of the contractual relationship
      between the banker and customer, and as such no information should be
      divulged to third parties except under circumstances which are well defined
      such as:
     •      where disclosure is under compulsion of law;

     •      where there is a duty to the public to disclose;

     •      where interest of bank requires disclosure; and

     •      where the disclosure is made with the express or implied consent of the
            customer.17

      186.       The Securities and Exchange Board of India (SEBI) Circular issued
      on 8 November 2001 specifies that the agreement between a stock broker and
      his/her client must contain a clause to the effect that “the member hereby
      undertakes to maintain the details of the client, as mentioned in the client
      registration form or any other information pertaining to client, in confidence
      and that he shall not disclose the same to any person/entity except as required
      under the law”. As disclosure is allowed as required under the law, the ITD
      could use its powers to obtain this information from companies and
      individuals operating in the securities sector.
      187.      The Insurance Act 1938 does not specifically refer to obligations of
      secrecy concerning clients. Further, s.33 of that act imposes an obligation on
      insurers to produce all such books of accounts, registers and other
      documentation when requested by an inspector from the Insurance Regulatory
      and Development Authority (IRDA). Thus, it appears the ITD could use its
      powers to obtain this information from companies and individuals operating in
      the insurance sector.

      Determination and factors underlying recommendations
                                              Determination
         The element is in place.

17
         Tournier v National Provincial and Union Bank of England [1924] 1 KB 461,
         sets out four areas where a bank can legally disclose information about its
         customer. These principles still hold good in many common law jurisdictions,
         including India, and are: (i) where the bank is compelled by law to disclose the
         information; (ii) if the bank has a public duty to disclose the information; (iii) if
         the bank’s own interests require disclosure; and (iv) where the customer has
         agreed to the information being disclosed.



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B.2.      Notification requirements and rights and safeguards

       The rights and safeguards (e.g. notification, appeal rights) that apply to persons
       in the requested jurisdiction should be compatible with effective exchange of
       information.


       Not unduly prevent or delay exchange of information (ToR B.2.1)
       188.      Under India’s law, there is no obligation to notify the subject of a
       request for information.
       189.       The limits on information which can be exchanged that are provided
       for in the 2002 OECD Model Agreement on Exchange of Information on Tax
       Matters and its commentary, and in Article 26 of the OECD Model Tax
       Convention on Income and on Capital and its commentary are included in all
       of the DTCs concluded by India. That is, information which is subject to legal
       privilege; which would disclose any trade, business, industrial, commercial or
       professional secret or trade process; or would be contrary to public policy, is
       not required to be exchanged. In addition, the Evidence Act 1872 (see below)
       specifically allows the competent authority to decline to exchange information
       where the information is covered by attorney client privilege
       190.       In India, practicing chartered accountants, practicing company
       secretaries and lawyers undertake the work of company formation agents.
       Ownership and identity information, and also accounting records, may
       therefore be held in India by such intermediaries and professional advisers.
       191.       A number of forms of professional secrecy exist in India which may
       be overridden as required by law. Important amongst these are the secrecy
       provisions in s.140 of the Accountants’ Code of Conduct and Schedule 2 of
       the Company Secretaries Act 1980. As these may be overridden by law, the
       ITD can exercise its powers under ITA s.131 and s.133-s.134 to gain
       information from such professionals when so requested by the competent
       authority in order to satisfy an EoI request.
       192.      Unlike the professional secrecy in place for other professions in
       India, the secrecy provisions in place with respect to barristers, attorneys,
       pleaders, vakils and legal advisers are absolute and cannot be overridden by
       other laws (s.126 of the Evidence Act 1872).
        s.126. Professional communications - No barrister, attorney, pleader or
        vakil, shall at any time be permitted, unless with his client's express consent
        to disclose any communication made to him in the course and for thee [sic]
        purpose of his employment as such barrister, pleader, attorney or vakil, by or
        on behalf of his client, or to state the contents or condition of any document
        with which he has become acquainted in the course and for the purpose of his


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      professional employment or to disclose any advice given by him to his client
      in the course and for the purpose of such employment.
      Provided that nothing in this section shall protect from disclosure -
      1. Any communication made in furtherance of any illegal purpose,
      2. Any fact observed by any barrister, pleader, attorney or vakil, in the course
      of his employment as such showing that any crime or fraud has been
      committed since the commencement of his employment.
      It is immaterial whether the attention of such barrister, pleader, attorney or
      vakil was or was not directed to such fact by or on behalf of his client.

      193.       Indian authorities indicate that this provision applies only to legal
      advice provided by a barrister, attorney, pleader or vakil and not to other
      activities they conduct, such as company formation or any kind of financial
      activities. Where s.126 refers to “in the course and for the purpose of his
      professional employment” it is interpreted by the Indian authorities to refer
      solely to advice given as a legal professional, not other professional activities.
      Further, this privilege would not, for example, attach to documents or records
      delivered to a legal professional in an attempt to protect such documents or
      records from disclosure required by law. As a result, India’s ITD can exercise
      its powers under the ITA to gain information from these legal professionals, as
      long as that information does not relate to legal advice provided to clients.

      Determination and factors underlying recommendations
                                            Determination
       The element is in place.




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C.        Exchanging Information


Overview

       194.       Jurisdictions generally cannot exchange information for tax purposes
       unless they have a legal basis or mechanism for doing so. In India, the legal
       authority to exchange information derives from bilateral mechanisms (double
       tax conventions) as well as from domestic law. This section of the report
       examines whether India has a network of information exchange that would
       allow it to achieve effective exchange of information in practice.
       195.      India has an extensive treaty network allowing for exchange of
       information for tax purposes, and is currently engaged in additional treaty
       negotiations as well as renegotiations of its older treaties. India currently has
       78 double-taxation conventions (DTCs), all of which are in force and in effect.
       Almost all of these meet the standards. India is encouraged to continue this
       work and successfully conclude agreements as part of the current round of
       treaty negotiations and to progress negotiations with additional partners.
       196.       India’s DTCs provides for the exchange of information that is
       ‘necessary’ for carrying out the domestic laws of the Contracting States
       concerning taxes covered by the agreements. All of India’s DTCs provide for
       exchange of information with respect to all persons. India is obliged to provide
       information under its EoI arrangements even when the information is held by a
       financial institution, nominee or person acting in an agency or a fiduciary
       capacity and when it relates to ownership interests in a person. India must
       exchange information without regard to whether the requested it needs the
       information for its own tax purposes. There are no dual criminality provisions
       in India’s DTCs. There is no distinction drawn in India’s DTCs between civil
       and criminal matters as far as taxation is concerned. There are no restrictions
       in the exchange of information provisions in India’s DTCs that would prevent
       India from providing information in a specific form, as long as this is consistent
       with its own administrative practices.
       197.      All exchange of information articles in India’s DTCs have
       confidentiality provisions and India’s domestic legislation also contains
       relevant confidentiality provisions. These provisions do not draw a distinction
       between information received in response to requests or information forming


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       part of the requests themselves. As such, they apply equally to all information
       and documentation forming the requests received by India as well as to
       responses received from counterparties.
       198.      Each of India’s DTCs ensures that the parties are not obliged to
       provide information which would disclose trade, business, industrial,
       commercial or professional secrets or information which is the subject of
       attorney client privilege or to make disclosures which would be contrary to
       public policy.
       199.       There appear to be no legal restrictions on the ability of India’s
       competent authority to respond to requests within 90 days of receipt by
       providing the information requested or by providing an update on the status of
       the request. The assessment team is not currently in a position to evaluate this,
       as it involves issues of practice that will be dealt with in the Phase 2 review.
       200.      India’s competent authority is part of the Central Board of Direct
       Taxes. The Board does not have power to obtain information directly but can
       direct the income tax authorities to obtain information in order to answer an
       international request for information.


C.1.     Exchange-of-information mechanisms

         Exchange of information mechanisms should allow for effective exchange
         of information.

       201.       ITA s.90 provides the power to establish agreements with foreign
       countries or specified territories with respect to taxation. Section 90(1)(c)
       specifically allows for establishment of agreements for exchange of
       information.
       (1) The Central Government may enter into an agreement with the
       Government of any country outside India or specified territory outside India,—
       …
             (c) for exchange of information for the prevention of evasion or
             avoidance of income-tax chargeable under this Act or under the
             corresponding law in force in that country or specified territory, as the
             case may be, or investigation of cases of such evasion or avoidance, or
             (d) for recovery of income-tax under this Act and under the
             corresponding law in force in that country or specified territory, as the
             case may be,
       and may, by notification in the Official Gazette, make such provisions as may
       be necessary for implementing the agreement. …



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       202.      India has been actively establishing exchange of information
       mechanisms and exchanging information for 40 years. The first of its 78
       double-taxation conventions (DTCs) was signed with Greece in 1965. The
       most recent was a renegotiated DTC with Finland, which was signed on 15
       January 2010 and came into effect on 19 April 2010. Each of India’s DTCs
       have entered into force around one year after signature, after necessary
       implementing measures are taken by the treaty partners.

       Foreseeably relevant standard (ToR C.1.1)
       203.       All but 4 of India’s DTCs provide for the exchange of information
       that is ‘necessary’ for carrying out the provisions of the agreement or of the
       domestic laws of the Contracting States concerning taxes covered by the
       agreement. As such, these agreements meet the ‘foreseeably relevant’
       standard, as the term ‘necessary’ is recognised in the commentary to Article 26
       (Exchange of Information) of the OECD Model Tax Convention to allow for
       the same scope of exchange as does the term ‘foreseeably relevant’.
       204.       The wording of this paragraph in the agreements with Bangladesh,
       Mauritius, Tanzania, Thailand, the United Arab Emirates and Zambia is
       different to that of Article 26 of the OECD Model Tax Convention in that there
       is also specific reference to exchange of information for the prevention of
       evasion of taxes. This wording does not go below the international standard.
       205.      Three of the DTCs - with Austria, Germany and Greece - provide for
       the exchange of information that is ‘necessary’ for carrying out the provisions
       of the agreement, but do not specifically provide for the exchange of
       information in aid of the administration and enforcement of domestic laws.
       206.       The treaty with Switzerland incorporates additional language, noting
       that it applies to “… such information (being information which is at their
       disposal under their respective taxation laws in the normal course of
       administration) as is necessary …”. The bracketed text is not in line with the
       standard as it limits the exchange of information (EoI) article to information at
       the parties’ disposal under taxation laws, not information at their disposal under
       other laws, and it limits the EoI to information which is at their disposal in the
       normal course of administration. Thus, if it is not ‘normal’ for one of the
       parties to obtain certain information, the information cannot be provided to the
       other Contracting State.

       In respect of all persons (ToR C.1.2)
       207.       All of India’s DTCs provide for exchange of information with respect
       to all persons. None of these treaties restricts the applicability of the exchange



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      of information provision to certain persons, for example those considered
      resident in one of the States.

      Obligation to exchange all types of information (ToR C.1.3)
      208.       Only India’s recent DTCs with Myanmar and Tajikistan includes the
      provision contained in paragraph 26(5) of the OECD Model Tax Convention,
      which states that a contracting state may not decline to supply information
      solely because the information is held by a bank, other financial institution,
      nominee or person acting in an agency or a fiduciary capacity or because it
      relates to ownership interests in a person.
      209.       Article 27 of the treaty with Luxembourg does not contain this
      provision. However, the protocol to the treaty contains a most favoured nation
      clause which obliges Luxembourg to apply in its relations with India any
      exchange of information arrangement agreed in a tax treaty or protocol
      concluded by Luxembourg with an EU Member State that is more favourable
      or effective than the one agreed in the Luxembourg-India tax treaty.
      210.       The other 75 DTCs do not contain such a provision. While there are
      no limitations in India’s laws with respect to access to bank information, there
      may be such limitations in place in the domestic laws of some of its treaty
      partners: Austria, Belgium, Singapore and Switzerland. In these cases, the
      absence of a specific provision requiring exchange of bank information
      unlimited by bank secrecy will serve as a limitation on the exchange of
      information which can occur under the relevant DTC. India has written to all
      of these 74 partners seeking renegotiation of the treaties, including to
      incorporate the language of paragraphs 4 and 5 of the OECD Model Tax
      Convention. Indian authorities advise that the renegotiation of the agreement
      with Switzerland has recently concluded and this now incorporates language
      specifying that the parties may not decline to supply information solely because
      the information is held by a bank, other financial institution, nominee or person
      acting in an agency or a fiduciary capacity or because it relates to ownership
      interests in a person, however the exact text of the new agreement has not been
      seen by the assessment team.

      Absence of domestic tax interest (ToR C.1.4)
      211.      India’s recent DTCs with Luxembourg, Myanmar and Tajikistan
      include paragraph 26(4) of the OECD Model Tax Convention. Its DTC with
      Canada includes a version of the provision contained in paragraph 26(4) of the
      OECD Model Tax Convention. This provides that India and Canada may not
      decline to supply information solely because it does not, at that time, need such
      information:



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        If information is requested by a Contracting State in accordance with the
        provisions of this Article, the other Contracting State shall endeavour to
        obtain the information to which the request relates in the same way as if its
        own taxation was involved notwithstanding the fact that the other State does
        not, at that time, need such information.
       212.      India’s 74 other agreements do not contain such a provision. There
       are no domestic tax interest restrictions on India’s powers to access
       information, which require that the information be relevant to the determination
       of a tax liability in India (see section B.1 of this report). India is able to
       exchange information, including in cases where the information was not
       publicly available or already in the possession of the governmental authorities.
       213.        A domestic tax interest requirement may however exist for some of
       India’s treaty partners. In such cases, the absence of a specific provision
       requiring exchange of information unlimited by domestic tax interest will serve
       as a limitation on the exchange of information which can occur under the
       relevant DTC. As noted above, India is currently seeking to renegotiate many
       of its treaties to ensure they incorporate the language of paragraphs 4 and 5 of
       the OECD Model Tax Convention.

       Absence of dual criminality principles (ToR C.1.5)
       214.      There are no dual criminality provisions in 77 of India’s 78 double
       taxation conventions. Paragraph 2 of the DTC with Switzerland does however
       contain a dual criminality clause as it states that (emphasis added):
        In no case shall the provisions of this Article be construed as imposing upon
        either of the Contracting States the obligation to carry out administrative
        measures at variance with the regulations and practice of either Contracting
        State or which would be contrary to its sovereignty, security or public policy
        or to supply particulars which are not procurable under its own legislation or
        that of the State making application.
       215.      Indian authorities advise that this agreement has recently been
       renegotiated, however the exact text of the new agreement has not been seen by
       the assessment team.

       Exchange of information in both civil and criminal tax matters (ToR
       C.1.6)
       216.      There is no distinction drawn in most of India’s DTCs between civil
       and criminal matters as far as taxation is concerned. Most of the DTCs are
       entitled “Agreement for avoidance of double taxation and prevention of fiscal
       evasion with [name of counterparty]”. In addition, the first paragraph of the


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      exchange of information article in many of India’s DTCs specifically mentions
      that the information exchange will occur inter alia “for the prevention of
      evasion or avoidance of, or fraud in relation to, such taxes”. The relevant
      exchange of information article in double taxation conventions signed by India
      may be used to obtain information to look into both civil and criminal tax
      matters.
      217.      The exception to this is the DTC with Switzerland, which notes that
      the information “…shall not be disclosed to any persons other than those
      concerned with the assessment and collection of the taxes which are the subject
      of this Agreement.” No mention is made of the ability to provide information
      for the “enforcement of domestic laws” or to those concerning with the
      enforcement or prosecution or determination of appeals. Indian authorities
      advise that this agreement has recently been renegotiated and no longer
      contains this wording, however the exact text of the new agreement has not
      been seen by the assessment team.

      Provide information in specific form requested (ToR C.1.7)
      218.      There are no restrictions in the exchange of information provisions in
      India’s DTCs that would prevent India from providing information in a specific
      form, as long as this is consistent with its own administrative practices. Indeed,
      two of India’s DTCs include specific clauses to reinforce the need to provide
      information in the form requested:
      DTC with Canada, Article 26(3): If specifically requested by the competent
      authority of a Contracting State, the competent authority of the other
      Contracting State shall endeavour to provide information under this Article in
      the form requested, such as depositions of witnesses and copies of unedited
      original documents (including books, papers, statements, records, accounts or
      writings), to the same extent such depositions and documents can be obtained
      under the laws and administrative practices of that other State with respect to
      its own taxes.
      DTC with the United States, Article 28(4): If specifically requested by the
      competent authority of a Contracting State, the competent authority of the
      other Contracting State shall provide information under this Article in the
      form of depositions of witnesses and authenticated copies of unedited original
      documents (including books, papers, statements, records accounts and
      writings), to the same extent such depositions and documents can be obtained
      under the laws and administrative practices of that other State with respect to
      its own taxes.




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       In force (ToR C.1.8)
       219.      All 78 of India’s DTCs are in force. The most recent new tax treaty
       is that with Tajikistan, which was signed on 20 November 2008 and entered
       into force on 10 April 2009. Further, a renegotiated DTC with Finland was
       signed on 15 January 2010 and came into effect on 19 April 2010

       In effect (ToR C.1.9)
       220.       All 78 of India’s DTCs are in effect. Under ITA s.90, it is the
       Central Government which may enter into agreements with the Government of
       any country outside India or specified territory outside India, for exchange of
       information for the prevention of evasion or avoidance of income tax. After
       negotiations have been successfully concluded, the agreement is sent to Cabinet
       for approval. Once this approval is obtained, India is ready to sign the
       agreement. On signing, the agreement is ready to immediately enter into force
       in India; no further steps are required to bring it into force. Commonly, it has
       taken in the order of 1 year for India’s DTCs to come into effect, due to
       procedures required by the other party to the agreement to being the agreement
       into effect.

       Determination and factors underlying recommendations
                                           Determination
           The element is in place.



C.2.       Exchange-of-information mechanisms with all relevant partners

           The jurisdictions’ network of information exchange mechanisms
           should cover all relevant partners.

       221.        India’s 78 DTCs are with a wide range of counterparties, including:
       •    4 of its 6 neighbouring countries (Bangladesh, Burma, China and Nepal;
            but not Bhutan or Pakistan);




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     •      9 of its 10 primary trading partners18 (Belgium, China, Germany, Saudi
            Arabia, Singapore, United Arab Emirates, United Kingdom, United States,
            Netherlands; but not Hong Kong);

     •      25 of the 30 countries which are home to the largest non-resident Indian
            populations (not including Fiji, Guyana, Bahrain, Suriname and Jamaica);

     •      44 of the 92 Global Forum member jurisdictions;

     •      28 of the 31 OECD member economies (DTCs have not been established
            with Chile, Mexico and the Slovak Republic);

     •      17 of the other 19 G20 members (not including Argentina and Mexico);

     •      30 counterparties in Asia, 30 in Europe, 12 in Africa, 3 in North America, 2
            in Oceania and 1 in South America.19

      222.      The Indian government has commenced work towards establishing
      TIEAs with further jurisdictions: Bahamas, Bermuda, British Virgin Islands,
      Cayman Islands, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey,
      Liechtenstein, the Netherlands Antilles, Macau, the Marshall Islands, Monaco,
      the Netherlands Antilles and Saint Kitts and Nevis. In addition, in August
      2009, India said that it is revising its double taxation avoidance treaties,
      especially those which were concluded prior to 2004. One of its stated
      objectives is to renegotiate anti-abuse provisions.
      223.       It can be seen that India has an extensive treaty network allowing for
      exchange of information for tax purposes. India is encouraged to successfully
      conclude agreements with the jurisdictions it recently announced its intention to
      negotiate with and with additional relevant partners, such as those in its region,
      economically important jurisdictions and those with clear financial and trade
      ties to India.




18
         Department Of Commerce, 27 July 2009, Press Release: “India’s Trading
         Partners”, http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=2444,
         accessed 6 May 2010.
19
         Using the 7-continent model.



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       Determination and factors underlying recommendations
                                              Determination
           The element is in place.
                   Factors underlying                          Recommendations
                   recommendations
                                                     In addition to the current round of
                                                     negotiations, it is recommended that
                                                     the Indian government progress
                                                     agreements with additional partners.


C.3.      Confidentiality

           The jurisdictions’ mechanisms for exchange of information should have
           adequate provisions to ensure the confidentiality of information received.


       Information received: disclosure, use, and safeguards (ToR C.3.1)
       224.      All exchange of information articles in India’s DTCs have
       confidentiality provisions. While each of the articles might vary slightly in
       wording, overall, these provisions take one of two forms:
        Any information received by a Contracting State shall be treated as secret in
        the same manner as information obtained under the domestic laws of that State
        and shall be disclosed only to persons or authorities (including courts and
        administrative bodies) concerned with the assessment or collection of, the
        enforcement or prosecution in respect of, or the determination of appeals in
        relation to the taxes referred in the first sentence. Such persons or authorities
        shall use the information only for such purposes. They may disclose the
        information in public court proceedings or in judicial decisions.
        Any information received by a Contracting State shall be treated as secret in
        the same manner as information obtained under the domestic laws of that
        State. However, if the information is originally regarded as secret in the
        transmitting State, it shall be disclosed only to persons or authorities
        (including Courts and administrative bodies) involved in the assessment or
        collection of, the enforcement or prosecution in respect of, or the
        determination of appeals in relation to, the taxes which are the subject of the
        Agreement. Such persons or authorities shall use the information only for such
        purposes but may disclose the information in public court proceedings or in
        judicial decisions.

       225.      Both forms of the confidentiality article contain all of the essential
       aspects of paragraph 2 of Article 26 of the OECD Model Convention.


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      226.      One of the EOI provisions includes a variation which is of interest in
      terms of confidentiality. The first paragraph of the provision in the DTC with
      Mauritius, signed in 1982, allows that the person(s) to whom the request relates
      may be provided information or documents exchanged under the agreement
      (emphasis added):
      The competent authorities of the Contracting States shall exchange such
      information or document as is necessary for carrying out the provisions of this
      Convention or for prevention of evasion of taxes which are the subject of this
      Convention. Any information or document so exchanged shall be treated as
      secret but may be disclosed to persons (including courts or other authorities)
      concerned with the assessment, collection, enforcement, investigation or
      prosecution in respect of the taxes which are the subject of this Convention, or
      to persons with respect to whom the information or document relates.

      227.      The scope of the exceptions to confidentiality in this EOI provision is
      broader than that provided for in Article 26 of the OECD Model Convention
      and may not therefore adequately ensure the confidentiality of information
      received. The DTC does not contain any further details on the circumstances in
      which this may occur, nor is there information on the criteria or procedures
      involved in such a decision to share information with persons with respect to
      whom the EOI relates. Nor does it indicate that such disclosure would only
      occur if agreed by the jurisdiction concerned. Indian authorities have indicated
      that the provisions of the ITA, which allow the taxpayer or other persons
      concerned to access information related to them, would apply here.
      228.      India’s domestic legislation contains relevant confidentiality
      provisions. Importantly, ITA s.138 provides that ITD officers may provide
      information gained in the course of their duties to other civil servants
      performing functions under the tax or foreign exchange legislation, or if it is
      deemed to be in accordance with the public interest. This is detailed further in
      Notification SO2048 of 23 June 1965 which allows exceptions to the general
      confidentiality requirements, including where there the information is needed
      under court order or as part of a prosecution, where the information is needed
      by authorised officers for tax matters, where it is needed for foreign exchange
      or balance of payments work, and, importantly, where the information is to be
      shared with “an authorised officer of the Government of any country outside
      India for the granting of relief in respect of, or for the avoidance of double
      taxation as may be necessary for the purposes of section 90 of the Act”.

      All other information exchanged (ToR C.3.2)
      229.      The confidentiality provisions in the DTCs and in India’s domestic
      law do not draw a distinction between information received in response to
      requests or information forming part of the requests themselves. As such, these


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       provisions apply equally to all requests for such information, background
       documents to such requests, and any other document reflecting such
       information, including communications between the requesting and requested
       jurisdictions and communications within the tax authorities of either
       jurisdiction.

       Determination and factors underlying recommendations
                                              Determination
         The element is in place.



C.4.      Rights and safeguards of taxpayers and third parties

         The exchange of information mechanisms should respect the rights and
         safeguards of taxpayers and third parties.


       Exceptions to requirement to provide information (ToR C.4.1)
       230.      Each of India’s DTCs ensures that the parties are not obliged to
       provide information which would disclose any trade, business, industrial,
       commercial or professional secret or information which is the subject of
       attorney client privilege or information the disclosure of which would be
       contrary to public policy. This is supported by provisions in the Evidence Act
       1872 which allow the competent authority to decline to exchange information
       where the information is covered by attorney client privilege.

       Determination and factors underlying recommendations
                                              Determination
         The element is in place.




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C.5.     Timeliness of responses to requests for information

        The jurisdiction should provide information under its network of agreements
        in a timely manner.


       Responses within 90 days (ToR C.5.1)
       231.      There are no provisions in India’s laws or in its DTCs pertaining to
       the timeliness of responses or the timeframe within which responses should be
       provided. As such there appear to be no legal restrictions on the ability of
       India’s competent authority to respond to requests within 90 days of receipt by
       providing the information requested or by providing an update on the status of
       the request.

       Organisational process and resources (ToR C.5.2)
       232.       India’s competent authority is the Joint Secretary (FT&TR). This
       functional role has been split into 2 positions: JS(FT&TR-I) and JS(FT&TR-II)
       which are part of the Central Board of Direct Taxes, which is the statutory body
       with functional responsibilities for the administration of the ITA. JS(FT&TR-
       I) and JS(FT&TR-II) are located at New Delhi. Each of these Joint Secretaries
       is assisted by 1 Director and 2 Under Secretaries, along with support staff. All
       these officers are members of the Indian Revenue Service. In specific cases,
       officers of the ITD who are posted in the field, provide assistance to the
       competent authority.
       233.       ITA s.90 provides the Central Government with the power to
       establish agreements with foreign countries or specified territories with respect
       to taxation. Section 90(1)(c) specifically allows for establishment of
       agreements for exchange of information and it provides that the Central
       Government may, by notification in the Official Gazette, make such provisions
       as may be necessary for implementing the agreement. This power to establish
       agreements for EOI is delegated to the competent authority by way of an
       Administrative Office Order issued by the Finance Minister.
       234.       Under the ITA various powers to obtain information are granted to
       ‘income tax authorities’. The Board does not have power to obtain information
       directly. However, under ITA s.119(1), the Board may, from time to time,
       issue such orders, instructions and directions to other income tax authorities as
       it may deem fit for the proper administration of the act, and such authorities
       and all other persons employed in the execution of the act, must observe the
       orders, instructions and directions of the Board. As a result, the Board can
       direct the income tax authorities who have power to obtain information to do so
       in order to answer a request for information received under a DTC as obtaining



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       such information are for the purpose of the act and for proper administration of
       the act.

       Absence of restrictive conditions on exchange of information (ToR
       C.5.3)
       235.      There are no provisions in India’s laws or in its DTCs which apply
       conditions to the exchange of information above those in accordance with
       Article 26 of the OECD Model Tax Convention.

       Determination and factors underlying recommendations
                                          Determination
         The assessment team is not in a position to evaluate whether this
         element is in place, as it involves issues of practice that are dealt
         with in the Phase 2 review.




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                Summary of Determinations and Factors
                   Underlying Recommendations


                                  Factors underlying
        Determination                                               Recommendations
                                  recommendations
  Jurisdictions should ensure that ownership and identity information for all relevant
  entities and arrangements is available to their competent authorities
  The element is in place
  Jurisdictions should ensure that reliable accounting records are kept for all relevant
  entities and arrangements
  The element is in place
  Banking information should be available for all account-holders
  The element is in place
  Competent authorities should have the power to obtain and provide information that
  is the subject of a request under an exchange of information arrangement from any
  person within their territorial jurisdiction who is in possession or control of such
  information (irrespective of any legal obligation on such person to maintain the
  secrecy of the information)
  The element is in place
  The rights and safeguards (e.g. notification, appeal rights) that apply to persons in
  the requested jurisdiction should be compatible with effective exchange of
  information
  The element is in place
  Exchange of information mechanisms should allow for effective exchange of
  information
  The element is in place
  The jurisdictions’ network of information exchange mechanisms should cover all
  relevant partners
                                                            In addition to the current round of
  The element is in place                                   negotiations, it is recommended
                                                            that   the    Indian    government
                                                            progress      agreements       with



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                            Factors underlying
      Determination                                            Recommendations
                            recommendations
                                                      additional partners.
 The jurisdictions’ mechanisms for exchange of information should have adequate
 provisions to ensure the confidentiality of information received
 The element is in place
 The exchange of information mechanisms should respect the rights and safeguards
 of taxpayers and third parties
 The element is in place
 The jurisdiction should provide information under its network of agreements in a
 timely manner
 The assessment team
 is not in a position to
 evaluate whether this
 element is in place, as
 it involves issues of
 practice that are dealt
 with in the Phase 2
 review




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                                                                                   ANNEXES – 73




   Annex 1: Jurisdiction’s Response to the Review Report*


           India will like to place on record the deep appreciation for the hard work
       done by the assessment team in evaluating India for the Phase I of the Peer
       Review process. It was a pleasure working with the team and India is pleased
       with the outcome.
           India will like to clarify on only one issue regarding the observation of the
       assessors in the report that there are no requirements that trustees hold
       information on settlers, trustees or beneficiaries. We have noted that this has
       not influenced the outcome of determination of any of the element as assessors
       have correctly reported that the information on beneficiaries of trusts is
       available within India, even otherwise.
           However, just for the proper understanding of the Indian legislation we will
       like to submit that the beneficiary information of trust is available with the
       trustee. In this regard section 6 of the Indian Trust Act is reproduced below:
           6. Creation of trust - Subject to the provisions of Section 5, a trust is
       created when the author of the trust indicates with reasonable certainty by any
       words or acts (a) an intention on his part to create thereby a trust, (b) the
       purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless
       the trust is declared by will or the author of the trust is himself to be the
       trustee) transfers the trust-property to the trustee.
            Illustrations
           A bequeaths certain property to B, "having the fullest confidence that he
       will dispose of it for the benefit of C." This creates a trust so far as regards A
       and C.
           A bequeaths certain property to B "hoping he will continue it in the
       family". This does not create a trust, as the beneficiary is not indicated with
       reasonable certainty.


            *      This Annex presents the Jurisdiction’s response to the review
                  report and shall not be deemed to represent the Global
                  Forum’s views.


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74 – ANNEXES


         A bequeaths certain property to B, requesting him to distribute it among
     such members of C's family as B should think most deserving. This does not
     create a trust, for the beneficiaries are not indicated with reasonable certainty.
         A bequeaths certain property to B, desiring him to divide the bulk of it
     among C's children. This does not create a trust, for the trust-property is not
     indicated with sufficient certainty.
         A bequeaths a shop and stock-in-trade to B, on condition that he pays A's
     debts and a legacy to C. This is a condition, not a trust for A's creditors and C.
         The above clearly shows that under the Indian Trust Act, a trust can not be
     created unless trustee knows the name of the settler as well as beneficiaries.
         Once again it is clarified that the above is only for the proper understanding
     of Indian legislation and this does not influence the outcome on any of the
     determination.




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                                                                                                             ANNEXES – 75




 Annex 2: List of all Exchange-of-Information Mechanisms
                          in Force

                                                    Type of EoI                                        Date Entered
                      Jurisdiction                                             Date Signed
                                                   Arrangement                                          Into Force

     1          Armenia                        Double Taxation 31.10.2003                             09.09.1904
                                               Convention (DTC)
     2          Australia                                 DTC               25.07.1991                30.12.1991
     3          Austria                                   DTC               08.11.1999                05.09.2001
     4          Bangladesh                                DTC               27.08.1991                27.05.1992
     5          Belarus                                   DTC               27.09.1997                17.07.1998
     6          Belgium                                   DTC               26.04.1993                01.10.1997
     7          Botswana                                  DTC               08.12.2006                30.01.2008
     8          Brazil                                    DTC               26.04.1988                11.03.1992
     9          Bulgaria                                  DTC               26.05.1994                23.06.1995
     10         Canada                                    DTC               11.01.1996                06.05.1997
     11         China                                     DTC               18.07.1994                21.11.1994
     12         Cyprus                                    DTC               13.06.1994                21.12.1994
     13         Czech Republic                            DTC               01.10.1998                27.09.1999
                             20
     14         Denmark                                   DTC               08.03.1989                13.06.1989
     15         Egypt (United Arab                        DTC               20.02.1969                30.09.1969
                Republic)
     16         Finland                                   DTC               10.06.1983                20.11.1984
     17         France                                    DTC               29.09.1992                01.08.1994
     18         Germany                                   DTC               19.06.1995                26.10.1996
     19         Greece                                    DTC               11.02.1965                01.04.1964


20
          Under a protocol, the DTC with Denmark is extended to apply in its entirety to the territory of the Faroe Islands.




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76 – ANNEXES

                                       Type of EoI                              Date Entered
               Jurisdiction                                 Date Signed
                                      Arrangement                                Into Force

   20     Hungary                          DTC            03.11.2003           04.03.2005
   21     Iceland                  DTC                    23.11.2007           21.12.2007
   22     Indonesia                DTC                    07.08.1987           19.12.1987
   23     Ireland                  DTC                    06.11.2000           26.12.2001
   24     Israel                   DTC                    29.01.1996           15.05.1996
   25     Italy                    DTC                    19.02.1993           23.11.1995
   26     Japan                    DTC                    07.03.1989           29.12.1989
   27     Jordan                   DTC                    20.04.1999           16.10.1999
   28     Kazakhstan               DTC                    09.12.1996           02.10.1997
   29     Kenya                    DTC                    12.04.1985           20.08.1985
   30     Korea (South)            DTC                    19.07.1985           01.08.1986
   31     Kuwait                   DTC                    15.06.2006           17.10.2007
   32     Kyrgyz Republic          DTC                    13.04.1999           10.01.2001
   33     Libya                    DTC                    02.03.1981           01.07.1982
   34     Luxembourg               DTC                    02.06.2008           09.07.2009
   35     Malaysia                 DTC                    14.05.2001           14.08.2003
   36     Malta                    DTC                    28.09.1994           08.02.1995
   37     Mauritius                DTC                    24.08.1982           11.06.1985
   38     Mongolia                 DTC                    22.02.1994           29.03.1996
   39     Montenegro               DTC                    08.02.2006           23.09.2008
   40     Morocco                  DTC                    30.10.1998           20.02.2000
   41     Myanmar                  DTC                    02.04.2008           30.01.2009
   42     Namibia                  DTC                    15.02.1997           22.01.1999
   43     Nepal                    DTC                    18.01.1987           01.11.1988
   44     Netherlands              DTC                    30.07.1988           21.01.1989
   45     New Zealand              DTC                    17.10.1986           03.12.1986
   46     Norway                   DTC                    31.12.1986           1986
   47     Oman                     DTC                    02.04.1997           03.06.1997




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                                                                                       ANNEXES – 77



                                          Type of EoI                              Date Entered
                  Jurisdiction                                  Date Signed
                                         Arrangement                                Into Force

    48       Philippines              DTC                     12.02.1996           21.03.1994
    49       Poland                   DTC                     21.06.1989           26.10.1989
    50       Portugal                 DTC                     11.09.1998           30.04.2000
    51       Qatar                    DTC                     07.04.1999           15.01.2000
    52       Romania                  DTC                     10.03.1987           14.11.1987
    53       Russia                   DTC                     25.03.1997           11.04.1998
    54       Saudi Arabia             DTC                     25.01.2006           01.11.2006
    55       Serbia                   DTC                     08.02.2006           23.09.2008
    56       Singapore                DTC                     24.01.1994           27.05.1994
    57       Slovenia                 DTC                     13.01.2003           17.02.2005
    58       South Africa             DTC                     04.12.1996           28.11.1997
    59       Spain                    DTC                     08.02.1993           12.01.1995
    60       Sri Lanka                DTC                     27.01.1982           24.03.1983
    61       Sudan                    DTC                     22.10.2003           15.04.2004
    62       Sweden                   DTC                     24.06.1997           25.12.1997
    63       Switzerland              DTC                     02.11.1994           29.12.1994
    64       Syria                    DTC                     10.11.2008           18.06.2008
    65       Tanzania                 DTC                     05.09.1979           16.10.1981
    66       Tajikistan               DTC                     20.11.2008           10.04.2009
    67       Thailand                 DTC                     22.03.1985           13.03.1986
    68       Trinidad and Tobago DTC                          08.02.1999           13.10.1999
    69       Turkey                   DTC                     31.01.1995           01.02.1997
    70       Turkmenistan             DTC                     25.02.1997           07.07.1997
    71       Uganda                   DTC                     30.04.2004           27.08.2004
    72       Ukraine                  DTC                     07.04.1999           31.10.2001
    73       United             Arab DTC                      29.04.1992           22.09.1993
             Emirates
    74       United Kingdom           DTC                     25.01.1993           26.10.1993




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78 – ANNEXES

                                       Type of EoI                              Date Entered
               Jurisdiction                                 Date Signed
                                      Arrangement                                Into Force

   75     Uzbekistan               DTC                    29.07.1993           25.01.1994
   76     Vietnam                  DTC                    07.09.1994           02.02.1995
   77     Zambia                   DTC                    05.06.1981           18.01.1984
   78     USA                      DTC                    12.09.1989           18.12.1990




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                                                                                   ANNEXES – 79




                   Annex 3: List of All Laws, Regulations
                      and Other Material Received



       Commercial Laws
            Companies Act 1956
            Companies Central Government Rules and Forms 1956
            Companies (Donations to National Funds) Act 1951
            Company Secretaries Act 1980
            Co-operative Societies Act 1912
            Disposal of Records Rules 2003
            Insurance Act 1938
            Limited Liability Partnership Act 2008
            Limited Liability Partnership Rules 2009
            Partnership Act 1932
            Societies Registration Act 1860
            Trusts Act 1882

       Taxation Laws
            Central Board of Revenue Act 1963
            Gift Tax Act 1958
            Income-tax Act 1961
            Income Tax Rules
            Wealth Tax Act 1957



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80 – ANNEXES
     Banking Laws
         Banking Regulation Act 1949
         Finance Act 2010
         Foreign Exchange Regulation Act 1973
         Reserve Bank of India Act 1934
         Reserve Bank of India Circular RBI/2009-10/490, 10 June 2010
         Reserve Bank of India Circular RBI/2009-10/504, 23 June 2010
         Reserve Bank of India Circular RBI/2009-10/507, 25 June 2010
         Special Economic Zones Act 2005

     Anti-Money Laundering Act/Regulations
         Notification 9, amending the AML Rules November 2009
         Prevention of Money Laundering Act 2002
         Prevention of Money Laundering Amendment Act 2009
         Prevention of Money Laundering Rules 2005

     Other
         Constitution of India 1950
         Official copies of tax treaties
         Wakf Act 1995




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                                                                                   ANNEXES – 81




       Annex 4: Overview of Commercial Laws and Other
         Relevant Factors for Exchange of Information



       Primary legislation
            The Income-Tax Act 1961 (the ITA) is a central government act which
       consolidates the Indian law relating to income tax and super tax
       (superannuation tax). It governs the taxation of natural and legal persons,
       including companies, partnerships, and trusts and is administered by the ITD,
       within the Department of Revenue, which falls under the portfolio of the
       Ministry of Finance. The ITA, as amended by Finance (No.2) Act 2009, is the
       primary piece of legislation of import for the exchange of tax information (see
       s.90). International exchange of tax information is conducted in accordance
       with double taxation conventions (DTCs). Corresponding to s.90, the Wealth
       Tax Act 1957 s.44A and the Gift Tax Act 1958 s.44, contain provisions to
       empower the Central Government to enter into agreements for avoidance of
       double taxation in regard to the levy of wealth tax or gift tax or for exchange of
       information for the prevention of evasion or avoidance or for the recovery of
       tax.
           The Companies Act 1956 empowers the central government to regulate the
       formation, financing, functioning and winding up of companies. Companies
       are created, registered and regulated under this act, which is administered by
       the Ministry of Corporate Affairs and the Company Law Board. Company
       registration is managed by the registrars which exist in each State and
       Territory.
           India’s Partnership Act 1932 governs the law relating to partnerships, i.e.
       relations between persons who have agreed to share the profits of a business
       carried on by all or any of them acting for all. It is a Central Government act
       which is administered by the States, in consultation with the Ministry of



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82 – ANNEXES
     Corporate Affairs, and many of the activities outlined in the act are conducted
     by registrars based in each state.
         Unless otherwise provided, the Partnership Act 1932 does not apply to
     limited liability partnerships, i.e. those where a body corporate is formed and
     incorporated under the Limited Liability Partnership Act 2008 and which is a
     legal entity separate from that of its partners. The Limited Liability Partnership
     Act 2008 is administered by the Central Government Registrar of Companies,
     in consultation with the Ministry of Corporate Affairs.
          The Indian Trusts Act 1882 is the central government law relating to
     private trusts and trustees. Both the Central Government and the States have
     powers to legislate with respect to trusts and trustees (List III of Seventh
     Schedule to Constitution). Thus, the act applies all over India except when
     specifically amended / altered by any State Government. Trusts are defined as
     obligations annexed to the ownership of property, and arising out of a
     confidence reposed in and accepted by the owner, or declared and accepted by
     him, for the benefit of another, or of another and the owner. This act does not
     deal with wakf. The Courts in each State are granted adjudicatory jurisdiction
     in trust matters pursuant to the Trusts Act 1882.
         The Prevention of Money Laundering Act 2002 (PMLA), as amended in
     2005 and 2009, forms the core of the legal framework put in place by India to
     prevent money laundering and to provide for confiscation of property derived
     from or involved in money laundering. The PMLA and its Rules impose
     obligations on banking companies, financial institutions and financial
     intermediaries to verify the identity of clients, maintain records and furnish
     information to FIU-IND. The PMLA defines the money laundering offence
     and provides for the freezing, seizure and confiscation of the proceeds of crime.
     Tax crimes are not predicates for money laundering.
         The 2005 Mutual Evaluation of India’s implementation of the international
     anti-money laundering and counter-terrorist financing standards, conducted by
     the Asia/Pacific Group on Money Laundering (APG), found inter alia that21:
         the (then) new PMLA had not yet been supported by the necessary Rules
     and the FIU had not been established;
         some form of customer identification requirements applied to most of the
     key financial institutions, but the obligations imposed varied enormously;



21
      See http://www.apgml.org/documents/docs/8/India%20ME1%20-%20Final.pdf.
      India is currently undergoing a joint Financial Action Task Force/APG mutual
      evaluation, with the final report due to be adopted by the FATF in June and then
      by the APG in July 2010.



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                                                                                   ANNEXES – 83



           a passive company registration system was in place, with annual updates
       provided by all companies, and a similar registry was in place for non-profit
       organisations;
           India’s mutual legal assistance and extradition powers were not available
       for most types of money laundering.
           The primary legislation for charities and societies are the Societies
       Registration Act 1860, the Wakf Act 1954 and the Companies (Donations to
       National Funds) Act 1951.

       Primary government authorities
           The Ministry of Finance (MOF)22 is the central Ministry responsible for
       India’s fiscal policies, including revenue and tax collection, budgeting and
       Central Government expenditure. The MOF consists of the Department of
       Economic Affairs, the Department of Revenue, the Department of Expenditure,
       the Department of Financial Services, and the Department of Disinvestments.
       The MOF is also the central Ministry for the Directorate of Enforcement, the
       Central Board of Direct Taxes, the Central Board of Excise and Customs, the
       Central Economic Intelligence Bureau, and the Central Bureau of Narcotics.
           The Central Board of Direct Taxes (CBDT) is a part of Department of
       Revenue in the Ministry of Finance. The CBDT provides essential inputs for
       policy and planning of direct taxes in India, and, at the same time, it is also
       responsible for administration of direct tax laws through the Income Tax
       Department.23 The Central Board of Direct Taxes is a statutory authority
       functioning under the Central Board of Revenue Act 1963. The officials of the
       Board in their ex-officio capacity also function as a Division of the Ministry
       dealing with matters relating to levy and collection of direct taxes. India has
       also has a similar body for excise and customs issues; the Central Board of
       Excise and Customs.
           In India, two Joint Secretaries within the Department of Revenue, Ministry
       of Finance, are officially charged with the work of the competent authority of
       India for international tax matters. They are located in New Delhi and are
       entrusted with treaty negotiations and with exchange of information in
       accordance with such agreements Information sharing between national and
       state tax authorities is governed by ITA s.138. The competent authority may
       request information from the state tax authorities (s.131 and s.133(6)).


22
        www.finmin.nic.in.
23
        www.incometaxindia.gov.in.



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84 – ANNEXES
         The Reserve Bank of India (RBI)24 was established by the Reserve Bank of
     India Act 1934, which describes its basic functions as "...to regulate the issue of
     Bank Notes and keeping of reserves with a view to securing monetary stability
     in India and generally to operate the currency and credit system of the country
     to its advantage." In addition to issuance of currency and management of
     monetary policy, the RBI is the financial sector regulator and supervisor.
         The Ministry of Corporate Affairs (MCA)25 is concerned with
     administration of the Companies Act 1956, and related acts, rules and
     regulations, in order to regulate the corporate sector. It supervises three
     professional bodies; the Institute of Chartered Accountants of India, the
     Institute of Company Secretaries of India and the Institute of Cost and Works
     Accountants of India. The MCA is also responsible for the Partnership Act
     1932, the Companies (Donations to National Funds) Act 1951 and the Societies
     Registration Act 1860.
         The Registrars of Companies (ROC) manage registries of companies and
     limited liability firms in each State, under the MCA. The information on these
     registries is updated when companies notify the changes, which may be an
     annual requirement or may be required when a specified event occurs (e.g.
     changes in ownership/shareholding patterns). The Registrars of Societies
     (ROS) sits within State Governments’ purview and most of the States have a
     ROS office. Each State has enacted separate legislation on the subject. Most
     non-profit organisations are incorporated as societies and registered with the
     ROS in the primary state in which they operate.
         The Enforcement Directorate26 is responsible for implementation of the
     Foreign Exchange Management Act 1999 and the Prevention of the Money
     Laundering Act 2002. It falls under the administrative control of the
     Department of Revenue, Ministry of Finance. The Financial Intelligence
     Unit-India (FIU-IND)27 was established by an Official Government
     Memorandum in November 2004 and became operational in March 2006. It is
     the central national agency for receiving, processing, analysing and
     disseminating information relating to suspect financial transactions and large
     cash transactions. In addition, the FIU-IND is responsible for co-ordinating
     national and international intelligence and investigations to combat money
     laundering, terrorist financing and related crimes.



24
      www.rbi.org.in.
25
      www.mca.gov.in.
26
      www.directorateofenforcement.gov.in.
27
      www.fiuindia.gov.in.



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                                                                                   ANNEXES – 85



       Overview of the financial sector and relevant professions
           India has six free trade zones namely: Kandla free trade zone; Santa Cruz
       Electronics Export processing zone; Falta Export processing Zone; Madras
       export processing zone; Cochin Export Processing zone; and Noida Export
       Processing zone. Section 10A of the Income-Tax Act 1961 (the ITA) provides
       complete tax exemption in respect of profits and gains derived from industrial
       undertakings set up in these zones for a period of five years. Section 10B
       provides a complete tax exemption for any newly established 100% export
       oriented undertaking. Companies operating in the free trade zones must submit
       an annual tax return (ITA s.139).
            In addition, Special Economic Zones (SEZs) are being established to
       promote export-oriented commercial businesses under the Special Economic
       Zones Act 2005. More than 300 such zones exist throughout India, providing
       both multi-sector and specialist access. The scope of activities includes
       manufacturing, trading and services (mostly information technology). The
       SEZs have defined physical boundaries, to which access is controlled by
       Customs officers. These zones are oversighted by the Ministry of Commerce
       and Industry.28 While wide-ranging tax and customs incentives are offered to
       attract investment in the SEZs (ITA s.10AA), companies operating in the SEZs
       must submit annual tax returns (s.139).

       The financial sector
            While the Indian financial markets can be divided into three main sectors -
       banking and allied financial services, securities and insurance - the Indian
       financial sector is dominated by bank intermediation. Financial institutions in
       India can be categorised as commercial banks (public and private), co-operative
       banks, regional rural banks and development banks. Non-bank financial
       institutions include finance companies, insurance companies, leasing
       companies and other institutions. Private sector banks fall under the purview of
       the Companies Act 1956.
                                                             Number of financial
                     Type of institution
                                                         institutions (31 March 2009)
           Public sector banks                                           27
           Private sector banks                                          22
           Foreign banks                                                 31
           Regional rural banks                                          86


28
        www.sezindia.nic.in.



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                                                        Number of financial
                 Type of institution
                                                    institutions (31 March 2009)
        Local area banks                                            4
        Urban co-operative banks                                  1 721
        Non-bank     finance      companies                      12 403
        (NBFCs) (not deposit taking)
        Deposit-taking NBFCs                                       336
        Primary dealers                                             19
        Development financial institutions                          4


         India does not have Islamic banking institutions.
         Although the foreign exchange markets have been liberalised in recent
     years, foreign currency transactions may only be undertaken through banks,
     primary dealers and money changers so authorised by the RBI under the
     Foreign Exchange Management Act 1999. This act partly liberalised the
     foreign exchange markets in 1999, and replaced the criminal framework for
     breaches of the controls with administrative provisions and sanctions.
         The securities sector in India comprises various intermediaries as
     registered under s.12 of the Securities and Exchange Board of India Act 1992.
     In India, ‘securities’ includes shares, stocks, debentures, bonds, pass-through
     certificates, and government securities and mutual fund units. India has a
     system whereby depositories function as the central accounting and record-
     keeping offices for securities admitted by issuer companies.
         While stocks are traded on 19 exchanges across the country, the Bombay
     Stock Exchange and the National Stock Exchange account for nearly all equity
     and derivative transactions. Apart from investments by natural and legal
     persons based in India, money from abroad enters the capital markets through
     foreign institutional investors who are registered by the Securities Exchange
     Board of India (SEBI).
                                Number
          Regulated
                            (31 March            Regulated entities             Number
           entities
                              2009)
      Registrar to an                      Registered stock brokers
      issue and share      71                                                  9 622
      transfer agent
      Banker to an issue 51                Registered sub-brokers              62 761
      Debenture trustee 30                 Stock exchange                      19




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                                                                                        ANNEXES – 87



                                    Number
             Regulated
                                   (31 March          Regulated entities           Number
              entities
                                     2009)
        Merchant banker        137              Foreign institutional investors 1635
        Portfolio manager 232                   Custodians                         16
        Underwriter                             Collective investment
                               17               schemes, including mutual          45
                                                funds
        Depositories           2                Venture capital funds              133
        Depositories                            Foreign venture capital
                               718                                                 129
        participants                            investors
        Credit rating
                               5
        agency

           The insurance sector was opened for private participation in 1999 with the
       enactment of the Insurance Regulatory and Development Authority Act 1999
       (the IRDA Act). The legislative framework for this sector is contained in the
       Insurance Act 1938 and the IRDA Act. Since 2000, the number of participants
       in the industry has increased from six public-owned insurers to 46
       insurers/reinsurers providing life, general and re-insurance products.29
         Type of business            Public sector           Private sector         Total
        Life insurance                      1                       22                  23
        General insurance                   6                       16                  22
        Re-insurance                        1                        0                   1
        Total                               8                       38                  46


           Although India does not host offshore financial services in the traditional
       sense, it has made provision for offshore banking units (OBUs) to operate in
       the Special Economic Zones (SEZs). Nine OBUs have been set up in specific
       SEZs, although they can also provide services across all such zones. These
       units are prohibited from engaging in cash transactions and are restricted to
       lending to the SEZ wholesale commercial sector. They virtually function as
       foreign branches of Indian banks, but are located in India. OBUs are licensed
       and regulated prudentially by the RBI on the same lines as the domestic
       commercial banks.

29
        As at 31 March 2009.



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88 – ANNEXES
     Relevant professions
         There is no universal requirement that real estate agents or brokers be
     registered or licensed. Real estate deals are negotiated directly between sellers
     and buyers, but may be facilitated by agents or brokers. All real estate
     transactions are registered with the State Government in whose jurisdiction the
     transaction falls.
         The Bar Council of India is a self-regulatory organisation which oversees
     the enrolment, interests and discipline of lawyers, who are governed by the
     Advocates Act 1961. Lawyers are prohibited from facilitating financial
     transactions for their clients. Lawyers often undertake company formation
     work for clients. Notaries are lawyers who also perform notarial services,
     regulated by the Notaries Act 1955. Their role is limited to attesting documents
     and affidavits; verifying documents and transactions; and endorsing bills of
     exchange.
         Chartered accountants are regulated by the Institute of Chartered
     Accounts of India, established under the Chartered Accountants Act 1949.
     Practicing without being a member of the institute is an offence. Chartered
     accountants are legally permitted to render a wide range of services, including:
     auditing or verifying financial transactions, books, accounts or records; the
     preparing, verifying or certifying financial accounting and related statements;
     management consultancy; and company formation services.
         Company secretaries are regulated by the Institute of Company Secretaries
     of India, under the Company Secretaries Act 1980, though people may operate
     as company secretaries without being members of the institute. Company
     secretaries are authorised to:
     •   promote, form, incorporate, amalgamate, reorganise or wind up companies;

     •   file, register, present, attest or verify documents by or on behalf of the
         company;

     •   render services and advice related to shares and stocks of a company; and

     •   issue certificates on behalf of, or for the purpose of, a company.

         Trust and company service providers do not exist as a discrete business
     sector in India. These activities are typically provided by accountants and
     company secretaries. Institutions can, however, act as debenture trustees and
     provide other types of fiduciary/trust services in the securities sector. These
     types of trust companies also act as trustees under the Reconstruction of
     Financial Assets and Enforcement of Security Interest Act 2002 and provide



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                                                                                   ANNEXES – 89



       services for establishing and administering trusts. They are required to be
       licensed by the SEBI.




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                          (23 2010 26 1 P) ISBN 978-92-64-09552-6 – No. 57651 2010
Global Forum on Transparency and Exchange of Information
for Tax Purposes

PEER REVIEWS, PHASE 1: INDIA
The Global Forum on Transparency and Exchange of Information for Tax Purposes is
the multilateral framework within which work in the area of tax transparency and exchange
of information is carried out by over 90 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
purposes. These standards are primarily reflected in the 2002 OECD Model Agreement
on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commentary as updated
in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information
must be provided, including bank information and information held by fiduciaries,
regardless of the existence of a domestic tax interest or the application of a dual
criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
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plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement
the international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus
represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency.


  Please cite this publication as:
  OECD (2010), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
  Reviews: India 2010: Phase 1, Global Forum on Transparency and Exchange of Information
  for Tax Purposes: Peer Reviews, OECD Publishing.
  http://dx.doi.org/10.1787/9789264095533-en
  This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical
  databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.




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