India's Central Board of Direct Taxes is to ask for information on accounts held by taxpayers in banks abroad, such as in Switzerland, according to the Economic Times (of India).

CBDT is considering adding a column in income tax returns forms to seek this information, the newspaper said, quoting a person familiar with the matter. The proposal, sent last week to the office of CBDT chairman and the Prime Minister’s Office, came from KVM Pai, who retired in 2000 as chief commissioner of income tax, Mumbai. 

Mr Pai’s proposal is contained in a document prepared by him on the generation of underground money in the Indian economy and the income tax department’s role in checking  it.

Holding accounts abroad without informing the Reserve Bank of India violates Indian laws, especially the Foreign Exchange Management Act. If the proposal does become law, the information furnished will be open for verification by the income tax department.

Unlike before, this is possible now, because Swiss banks, bowing to international pressure after 9/11, are more open to parting with information. Mr Pai’s proposal is in view of the new found openness of Swiss banks.

The proposal could also turn out to be the first step on the part of the government of India to bring in at least some of the money concealed from the income tax department and held abroad. According to a report from a trade body representing Swiss banks and quoted by Mr Pai, Indians hold deposits worth $1.456 trillion.