Features of the Black Money Bill 2015

Features of the Black Money Bill 2015

Question - The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015 also known as the Black Money Bill was recently passed by the LS. Discuss its salient features

To deliver the poll promise of unearthing black money from abroad, government has introduced the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015 which was passed by the LS

Salient Features of the Bill

• The Bill applies to all persons residing in India; provisions of the Act apply to non disclosed foreign income and assets. This is inclusive of financial interests in any entity

• Undisclosed foreign income/assets shall be taxed at 30% which is a flat rate

• There shall be no exemption of education or even set off of any carried forward losses admissible under the current Income Tax Act 1961

• Violation of provisions of legislation will entail strict penalties; penalty for non disclosure of income or asset situated outside India will be equivalent to 3 times the amount of tax payable thereon

• This is 90% of the non disclosed income or asset

• This is along with the tax payable at 30% flat rate

• Failure to initiate returns in respect of foreign income/assets will attract INR 10 lakh penalty

• The same amount is for penalty for cases where assesses have filed return of income but not disclosed details of foreign income/asset or furnished wrong particulars of the same

• Bill stipulates enhanced punishment for violations

• Punishment for wilful tax evasion with regard to foreign income/asset outside India will be RI from 3 to 10 years

• There will also be a fine

• Failure for furnishing return in respect of foreign assets/ bank accounts or income will lead to RI and jail term of 6 months to 7 years

• The same punishment is prescribed were assessed persons have filed returns of income yet not disclosed foreign assets or furnished wrong particulars of the same

• These provisions also apply to those who are beneficiaries of illegal foreign assets

• Abetment or inducement to make false return or account/statement/declaration of another person will also attract RI for 6 months to 7 years

• Provision also applies to banks and financial institutions involved in concealing income or assets abroad or falsifying documents

• The Bill follows principles of natural justice and due process of law

• Mandatory issue of notices to persons against whom proceedings are being initiated is granted by the act

• Right of appeal has been protected through provisions of :
- Appeals to Income Tax Appellate Tribal
- Jurisdictional HC or SC on substantial questions of law

• Failure to report bank accounts with maximum balance of INR 5 lakh per year at any time will not attract penalty or prosecution

• Bill also provides one time compliance window for limited time to persons with undisclosed foreign assets which have so far not been disclosed for income tax purpose

• Bill provides these assesses can file declaration before specified tax authority within a period followed by tax payment of 30 percent and equal amount of penalty; such action will provide immunity from prosecution

• This is not an amnesty scheme as immunity from penalty is not being offered

• Bill also proposes amendment of PMLA/Prevention of Money Laundering Act to include tax evasion as a scheduled offence

Facts and Stats

• Second and subsequent offences to declare foreign income/assets attract RI of 3 to 10 years and fine of INR 1 crore
• Bill empowers Centre to enter into agreement with other nations for:

- Exchange of information
- Tax recovery
- Avoidance of double taxation

• As per this bill, tax authorities have the following powers:

- Power of discovery and inspection
- Issues of summons
- Enforcement of attendance
- Production of Evidence
- Impounding of documents and account books

• Tax liability on overseas property will be calculated on current market price, not price of purchase

• Proposal for the black money bill was first announced in FM Arun Jaitley’s first Budget for 2014-2015
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