Confidentiality provisions of tax treaties prohibit use of exchanged information for non-tax  purposes  

Confidentiality provisions of tax treaties prohibit use of exchanged information for non-tax  purposes without express consent 

Central Board of Direct Taxes (CBDT) has expressed concern over confidentiality of information obtained from foreign jurisdictions under the Exchange of Information (EOI) process  of Double Taxation Avoidance Agreements  (DTAAs)/ Tax Information Exchange Agreements (TIEAs)/ Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) (tax treaties).

In a communication addressed to all All Pr. CCsIT/ DGsIT(Inv.)/ CCsIT/ DGsIT, the CBDT has stated that it is India’s sovereign obligation to keep the information obtained through the EOI process of tax treaties with the other jurisdictions confidential. Any disclosure of the information received under tax treaties with unauthorized persons, either intentionally or by accident, is a serious matter.

The CBDT has pointed out that therefore, field authorities are required to take all steps to ensure that the information received under tax treaties is not disclosed inappropriately as it is necessary for continued co-operation in the EOI process from our treaty partners.

According to the CBDT, the confidentiality provisions of tax treaties also prohibit the use of exchanged information for non-tax  purposes  without the express consent  of the  Competent  Authority  of the  sending jurisdiction.  The information received under tax treaties cannot be used for enforcement of any law other than the laws concerning taxes covered by the relevant tax treaty. The information received can only be shared with any other Law Enforcement Agency (LEA), such as Enforcement Directorate,  CBI,  etc.,  after  obtaining  consent  from  the  Competent Authority  of the  sending jurisdiction.  

The field authorities have been instructed to make request for obtaining such consent to the FT&TR Division in the prescribed proforma. It has also been stated that the information can be shared with the concerned LEA only after the FT&TR division obtains and conveys the consent of the Competent Authority of the sending jurisdiction for sharing of the treaty exchanged information.

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