Swiss bank UBS
The logo of Swiss bank UBS in front of the Swiss Federal Palace in Berne.

In a big thrust to the Indian government's crackdown on black money inside and outside the country, a key Switzerland parliamentary panel approved automatic information exchange pact between the two countries. India had sought an approval from Switzerland to get an instant access to the details on Indians with accounts in Swiss banks.

The Commission for Economic Affairs and Taxes of the Council of States, an important panel of the Swiss Parliament's Upper House, approved the pact with India along with 40 other countries. The commission, however, added that provisions for individual legal claims ought to be strengthened.

The panel reportedly asked the Swiss government to submit an amendment to Parliament to "strengthen concrete individual legal protection and to ensure that no exchange of information can take place for individual cases where a violation of essential legal claims is likely," according to PTI.

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Reports state that the proposal will now be submitted for approval from the upper chamber of Swiss Parliament, the Council of States, in the winter session beginning on November 27.

The proposed pact will assist the countries in getting continuous access to details about alleged black money hoarders in Swiss banks. Reports state that the kind of information which can be exchanged under this framework would include the account number, name, address, date of birth, tax identification number, interest, dividend, receipts from insurance policies, credit balance in accounts and proceeds from the sale of financial assets.

According to the pact, if an Indian has an account in a bank in Switzerland, the concerned bank will disclose the financial account data to authorities there when required; the Swiss authorities will then automatically forward the information to the officials in India, who in turn would examine the details of the person.

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A money changer counts U.S. dollars in Mumbai, May 21, 2003 (representational image).Reuters file

Nearly 100 countries across the world, including India and Switzerland, have committed to adopting a global standard for the automatic exchange of information (AEOI), to help check cross-border tax evasion. 

Reports state that under this pact, domestic bank client confidentiality in Switzerland will not be affected. The proposed pact, which will come into effect from next year and first exchange of information in 2019, was approved by the Lower House of Parliament, the National Council, in September.

The economic affairs committee of the Upper House in Switzerland, while approving the pact, asked the government to put some additional safeguards in the automatic information exchange framework with India and other countries.