Highlights - Undisclosed Foreign Income and Assets (Imposition of Tax) Bill

Highlights - Undisclosed Foreign Income and Assets (Imposition of Tax) Bill

Question - Union Cabinet has stepped up in the fight against black money recently. Discuss the basic highlights of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill.

Union Cabinet has approved the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill which provides for penalty close to 300% of tax amounts evaded

• This is in addition to the 10 years rigorous imprisonment

• Bill also proposes mandatory return filing for owners/beneficiaries of foreign assets

• Failure/inability to make disclosures will attract a jail term of 7 years

• The Income Tax Act will also be amended to prohibit acceptance or payment of advance of INR 20,000 or more in cash for purchase of immovable property

• The Bill also provides a “short window” for offenders for declaration of wealth, payment of taxes as well as penalty and escaping prosecution

• The offence of stashing unaccounted money abroad is also a non-compoundable offence

• Offenders will not be permitted to approach the Settlement Commission

• Bill also states that non-filing of return with inadequate disclosure of foreign assets will attract a jail term of 7 years

• Bill says income with regard to undisclosed foreign asset or undisclosed income from foreign asset will be taxed at maximum marginal rate with 30 per cent plus surcharges

• Exemption and dedication of any nature will be disallowed and beneficial owner or beneficiaries of foreign assets are required to file return even in case there is no taxable income

• Government has not called this amnesty or immunity as not only tax, but also penalty would be levied on the offenders

• Date of opening the foreign account would be specified by assessee while filing returns

• Abettors of the above offences-persons, banks, entities and financial institutions will be liable for penalty and prosecution

Facts and Stats

• SIT on black money has widened probes following revelations of International Consortium of Investigative Journalists.

• As per the report of the consortium, 1.195 Indians with a total balance of INR 25,420 crore have black money stashed abroad. However, there is currently no official estimate of black money placed abroad.

• Report by NPO Global Financial Integrity indicates that India has lost INR 28 lakh crore as a result of illicit outflows between 2003 and 2012

• India is third in the world as far as illicit outflows are concerned amounting to INR 6 lakh crore
• Concealing or evading taxes has been designated as a “predicate offence”

• Other laws pertaining to black money include:
- PMLA/Prevention of Money Laundering
- Benaami Transactions (Prohibition) Bill
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