Explained: India will get Swiss bank details of Indians from today. What does this mean?

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  1. Recently,Automatic Exchange of Information (AEOI) Regime between India and Switzerland has started from September 1,2019. 
  2. In 2016,India and Switzerland had signed an information-sharing deal on bank accounts which was to come into effect from September 2019. 
  3. Automatic exchange of information involves the systematic and periodic transmission of taxpayer information by the source country to the residence country concerning various categories of income.
  4. This automatic exchange of information(AEOI) is to be carried out under the Common Reporting Standard (CRS).
  5. CRS is the global reporting standard for such exchange of information, which takes care of aspects such as confidentiality rules and data safeguards.The CRS has been developed by the Organisation for Economic Cooperation and Development(OECD).
  6. However,under the agreement,India will not receive information on bank accounts of Indians in Switzerland prior to 2018.
  7. AEOI is needed as tax payers operate cross border whereas tax administration is limited to national borders.This has helped tax evasion by shifting money to other countries by citizens.Hence,there is a need for tax cooperation and tax information exchanges between countries.
  8. This step is likely to shed more light on the wealth Indians have stashed away in Swiss bank accounts.In 2018,data from Zurich-based Swiss National Bank (SNB) had shown that after declining for three years, money parked by Indians in Swiss Banks has risen by 50%.