Press Information Bureau
Government of India
Ministry of Finance20-March-2015 15:54 IST
Government of India
Ministry of Finance20-March-2015 15:54 IST
Highlights of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 Introduced in Lok Sabha Today
The Finance Minister, in his budget speech, while acknowledging the limitations under the existing law, had conveyed the considered decision of the Government to enact a comprehensive new law on black money to specifically deal with black money stashed away abroad. He also promised to introduce the new Bill in the current Session of the Parliament.In order to fulfil the commitment made by the Government to the people of India through the Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015. The Bill provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the proposed new legislation.
The salient features of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 are as under:-
Scope – The Act will apply to all persons resident in India. Provisions of the Act will apply to both undisclosed foreign income and assets (including financial interest in any entity).
Rate of tax – Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed.
Penalties – Violation of the provisions of the proposed new legislation will entail stringent penalties.
The penalty for non-disclosure of income or an asset located outside India will be equal to three times the amount of tax payable thereon, i.e., 90 percent of the undisclosed income or the value of the undisclosed asset. This is in addition to tax payable at 30%.
Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs.10 lakh. The same amount of penalty is prescribed for cases where although the assessee has filed a return of income, but he has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.
Prosecutions – The Bill proposes enhanced punishment for various types of violations.
The punishment for willful attempt to evade tax in relation to a foreign income or an asset located outside India will be rigorous imprisonment from three years to ten years. In addition, it will also entail a fine.
Failure to furnish a return in respect of foreign assets and bank accounts or income will be punishable with rigorous imprisonment for a term of six months to seven years. The same term of punishment is prescribed for cases where although the assessee has filed a return of income, but has not disclosed the foreign asset or has furnished inaccurate particulars of the same.
The above provisions will also apply to beneficial owners or beneficiaries of such illegal foreign assets.
Abetment or inducement of another person to make a false return or a false account or statement or declaration under the Act will be punishable with rigorous imprisonment from six months to seven years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.
Safeguards – The principles of natural justice and due process of law have been embedded in the Act by laying down the requirement of mandatory issue of notices to the person against whom proceedings are being initiated, grant of opportunity of being heard, necessity of taking the evidence produced by him into account, recording of reasons, passing of orders in writing, limitation of time for various actions of the tax authority, etc. Further, the right of appeal has been protected by providing for appeals to the Income-tax Appellate Tribunal, and to the jurisdictional High Court and the Supreme Court on substantial questions of law.
To protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of upto Rs.5 lakh at any time during the year will not entail penalty or prosecution.
Other safeguards and internal control mechanisms will be prescribed in the Rules.
One time compliance opportunity – The Bill also provides a one time compliance opportunity for a limited period to persons who have any undisclosed foreign assets which have hitherto not been disclosed for the purposes of Income-tax. Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 percent and an equal amount by way of penalty. Such persons will not be prosecuted under the stringent provisions of the new Act. It is to be noted that this is not an amnesty scheme as no immunity from penalty is being offered. It is merely an opportunity for persons to come clean and become compliant before the stringent provisions of the new Act come into force.
Amendment of PMLA – The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA.
Thus, in keeping with the commitment of the government for focussed action on black money front, an unprecedented and multi-pronged attack has been launched to root out the menace of black money. The Government is confident that this new law will act as a strong deterrent and curb the menace of black money stashed abroad by Indians.
http://tinyurl.com/l5gacjr
Black Money Bill disallows foreign tax credits for undisclosed accounts
By Deepshikha Sikarwar, ET Bureau | 13 May, 2015, 01.15AM IST![Holders of such assets that are not declared within the stipulated period will be denied credits under double-taxation agreements.]( "Holders of such assets that are not declared within the stipulated period will be denied credits under double-taxation agreements.")
The black money law passed by the lower house provides for a twomonth compliance window to give one last chance to those with undeclared foreign assets to come clean. This would ensure respite from prosecution but they would be liable to pay tax at 30% and an equal amount as penalty. NEW DELHI: There's more trouble for Indians holding undeclared assets overseas as the black money bill passed by the Lok Sabha on Monday will disallow foreign tax credits, cutting off another loophole.
Holders of such assets that are not declared within the stipulated period will be denied credits under double-taxation agreements, according to a provision added to the bill as part of the amendments moved by the government.
"It is very clear that if you have not owned up to having an asset when the compliance window is open, you cannot turn back later and claim that taxes were paid in another jurisdiction and hence not declared," a government official told ET.
The Black Money (Undisclosed Income and Foreign Assets) Imposition of New Tax Bill was passed by the Lok Sabha on Monday. As it is a money bill, the Rajya Sabha's assent is not material. The provision is designed to encourage everyone to declare foreign assets so that the country gets an idea of the overseas wealth of Indians.
India gives credits for recognised taxes paid in another country as per the provisions of tax treaties. However, the government is keen to ensure that the law acts as a strong deterrent against parking of black money overseas.
The provision will ensure that any Indian resident who has not disclosed a foreign asset would not be able to take refuge in the fact that he or she had paid legitimate taxes on it in the overseas jurisdiction.
While the provision had said exemptions, deductions, set off and carried forward losses would not be allowed under the new legislation, the government also wanted to explicitly specify in the law itself that no foreign tax credit would be granted.
Tax experts say the provision enhances deterrence. "This just makes it very clear that there willbe no concession under the law," saidSunil Jain, a partner at Jyoti Sagar & Associates.
http://economictimes.indiatimes.com/news/politics-and-nation/black-money-bill-disallows-foreign-tax-credits-for-undisclosed-accounts/articleshow/47256103.cms?prtpage=1
Lok Sabha Passes Black Money Bill, Provides 2 Months' Window to Disclose Overseas Accounts
May 12, 2015
As part of the NDA government's crackdown on black money stashed overseas, the Lok Sabha passed a bill on Monday that makes hiding wealth overseas a criminal offence, attracting up to 10 years of rigorous imprisonment.
"All those who keep money outside – time is running out for them as the world is moving to an automatic information exchange and soon, when that is available, they will be penalised for their action," Union Finance Minister Arun Jaitley told parliament.
India and other G-20 members have committed to a global framework on automatic information exchange. The government will also receive information on assets held by Indian citizens in the US under FATCA.
Jaitley said that the bill would provide a 60-day compliance window for people to declare their unaccounted foreign income or assets and legalize these by paying a flat 30 percent tax and a similar penalty.
The stringent Black Money (Undisclosed Income and Foreign Assets) Imposition of New Tax Bill provides a strong deterrent for those who do not come clean. Apart from making it a criminal offence, the bill provides for the attachment of domestic property in India for those convicted under this law.
Anyone found abetting the stashing of wealth overseas, including tax advisors, financial advisors, banks and financial institutions, could also face jail terms of up to seven years.
Anyone found abetting the stashing of wealth overseas, including tax advisors, financial advisors, banks and financial institutions, could also face jail terms of up to seven years.
According to the Economic Times, after the compliance window closes, undisclosed foreign income or assets would be taxed at 30 percent, along with a penalty of 90 percent. Wilful attempts to evade tax on foreign income or assets could attract rigorous imprisonment from three years to 10 years, besides a fine.
The opposition Congress party, which supported the bill, raised concerns in parliament about its potential misuse.
"As far as black money bill is concerned, we have supported it and allowed it to pass without any dissent," Congress leader Shashi Tharoor said, adding, "but in the debate we expressed some very serious concerns about some of omissions and some ways in which bill can be misused."
However, the government allayed fears that innocent people could be harassed under the proposed law. Jaitley said no action would be taken against people having Rs 5 lakh ($7,800) or less in their overseas bank accounts.
The government is reportedly also preparing a separate bill to deal with black money within India.
- Karan Singh
https://www.scribd.com/doc/265172153/Undisclosed-Foreign-Income-and-Assets-Imposition-of-Tax-Bill-2015