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India Keeps Tabs On HNWIs

by Mary Swire,, Hong Kong

04 January 2011

The Indian Central Board of Taxes has asked staff across the country to use a new tool to track large transactions of high net-worth individuals.

This move has been hastened as a result of a bank relationship manager working for Citibank in Gurgaon, being accused of siphoning money from 20 accounts of HINWIs. Clients were allegedly promised high returns from investment schemes that didn’t exist, and the funds were then transferred to accounts in fictitious names. The employee is believed to have stolen almost INR4bn (USD89m).

The use of the Individual Transaction Statement (ITS) tool has been initiated by the finance ministry to track people's incomes, particularly those of wealthy individuals. A high-level panel to study transactions by HINWIs both in India and abroad has been set up.

The ITS enables tax investigators to view HINWIs' assets and recent transactions such as investment in mutual funds and shares. The details are compiled by using annual information reports from banks and other financial institutions. It is said that the financial dealings of more than 500 HINWIs have been already been circulated to tax officials for the purpose of recovering back taxes.

TAGS: individuals | tax | India | law | entrepreneurs | enforcement

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