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Indians on HSBC list out to prove their 'NRI' status

Indians are trying to escape prosecution by convincing Switzerland of their NRI status.

, ET Bureau|
Updated: May 28, 2019, 02.18 PM IST
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Foreign earnings of non-resident Indians are not taxable in India.
Mumbai: Indians in the infamous HSBC list are trying to escape embarrassment, fine and probably prosecution by convincing Switzerland of their non-resident status during the relevant years when they were clients of the British bank’s private banking arm in Geneva.

The Swiss Federal Tax Administration (FTA) has so far refrained from disclosing the names of at least three persons, said senior lawyers advising them.

“They have submitted their old passports to Swiss authorities to prove they had stayed out of India for more than 182 days. They have made their representations based on two grounds: NRI status and absence of any pending litigation,” one of the persons told ET. “But you have to hire Swiss lawyers, and they don’t come cheap,” said the person.

Foreign earnings of non-resident Indians are not taxable in India.

Information such as bank statement, and documents pertaining to incorporation of firms and discretionary trusts (in which many Indians in the HSBC list are beneficiaries) would be shared for bank accounts that have not been closed before April 1, 2011, when the relevant article on information sharing in the Indo-Swiss treaty came into effect.

Till last year, Indians, trying to persuade Switzerland not to release names, had argued that the information could not be shared as it was based on stolen data. “This can no longer be a defence, following last year’s ruling by the Federal Supreme Court allowing Switzerland to share data with India. This was because unlike France, India had not made any statement on whether it received the data legally,” said another lawyer.

The HSBC client list comprised of information leaked in 2008 by whistleblower Herve Falciani, a French citizen who worked for the private bank that only dealt with those who could bring in at least half-a-million dollars.

Under the process followed by Switzerland, the FTA would first sent notices to customers — seeking their consent — before sharing information about their accounts with India. However, even details of customers who do not give consent are disclosed once they are recorded in the Swiss official gazette. The names of 11Indians relate to cases that have already been recorded in the Swiss gazette.

“Interestingly, the Swiss authorities are not questioning residency status prior to April 2011. Most of these representations are built on demonstrating NRI status from April 1, 2011. Subsequently, Switzerland may ask India why information is required about a person who was an NRI. But it has not come to that stage,” said one of the persons mentioned.
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