New Delhi, Jun 23 (IANS): In a bid to curb offshore tax evasion, the Union Cabinet has approved an agreement between India and the Caribbean nations -- Saint Vincent and The Grenadines.

Under the pact, both the countries will exchange information and assistance in respect of collection of taxes.

An official statement said this is a new agreement between the Republic of India and Saint Vincent and The Grenadines and there was no such agreement in the past between the two countries.

"Agreement mainly proposes to facilitate exchange of information between the two countries and to provide assistance to each other in collection of tax claims," it said.

The agreement also contains tax examination abroad provisions which provide that a country may allow the representatives of the other country to enter its territory, to the extent permitted under its domestic laws, to interview individuals and examine records for tax purposes.

According to the Finance Ministry statement, the agreement will help in facilitating the exchange of information between the two countries, including sharing of information held by the banks and other financial institutions encompassing the information regarding the legal and beneficial ownership.

It will also facilitate the assistance in collection of the tax claims between the two countries.

"Thus, it will strengthen India's commitment to fight offshore tax evasion and tax avoidance practices leading to generation of unaccounted black money," it said.

India has been negotiating this agreement for a long time, said the ministry statement, adding that Saint Vincent and The Grenadines finally agreed to conclude this agreement with India which will promote tax cooperation between the two countries through exchange of information and assistance in collection of outstanding tax claims between the two countries.