India

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.   Under Indian tax law, all relevant legal entities and arrangements must file an annual tax return electronically, which must mandatorily contain the details of at least one bank account in India in their name. Therefore beneficial ownership information is required to be maintained under AML/CFT legislation by financial institutions in India. However, the implementation of this rule could not be fully ascertained in practice as comprehensive statistics were not available regarding compliance at this point due to time constraints. In addition, although the ratio of e-filing rate over paper filing rate improved significantly during the peer review period, the electronic tax filing requirement obliging companies, partnerships and trusts to provide the details of at least one bank account in India was introduced during the Financial Year 2013-2014.   India is recommended to monitor the implementation of the tax filing requirements to ensure that all relevant entities and arrangements maintain an account with a bank in India.  
Phase 2 Rating Factors Recommendations
Largely Compliant.  Since 2013, in addition to the AML/CFT framework, India also relies also on tax filing requirements to avail of beneficial ownership information with respect to companies. Although the definition of beneficial owners of companies is included in an explanatory note to the ITR-6 Form, there is no clear guidance for the taxpayer on how to apply and interpret this definition in practice.  India is recommended to issue clear guidelines to taxpayers on what is meant by the concept of “beneficial owner” and to ensure that tax audits continue to monitor the quality of this information collected through the ITR-6 Form. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.   Banks are required to identify natural persons who ultimately own or control a trust as part of their customer due diligence measures. However, they are not required to identify all of the beneficiaries of a trust as only the beneficiaries of 15% or more of the assets or property of a trust must be identified in all instances.   India should ensure that banks are required to identify all of the beneficiaries of trusts as required under the standard.  
Phase 2 Rating Factors Recommendations
Compliant.     
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). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
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. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
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.   Although India improved its practice regarding status updates as confirmed by some peers, particularly in the last six months of the peer review period, India did not always provide an update or status report to its EOI partners within 90 days when it was unable to provide a substantive response within that time; i.e. for about 75% of the EOI requests received during the first two and a half years of the review period. A significant number of peers have indicated issues with respect to the quality of EOI requests. Although India has shown improvement in the quality of outbound requests starting from 2015, as confirmed by some peers, and is implementing an action plan to ensure the quality of outbound requests and the communication with its EOI partners, a number of issues remain to be addressed and monitored to ensure consistent quality of EOI requests sent by India. The area of improvements concern the clarity of the EOI requests, the demonstration of foreseeable relevance of the EOI requests and an enhanced communication with its EOI partners (notably where bulk requests or complex requests are concerned).   It is recommended that India ensures the quality of the EOI requests sent to its EOI partners and an efficient communication with its EOI partners in all cases.  
Phase 2 Rating Factors Recommendations
Largely Compliant.     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.