Undisclosed Foreign Income and Assets bill was passed in Lok sabha in May 2015 popularly known as Black money Bill 2015. The purpose of this bill was to tax the illegal or undisclosed foreign income and assets. Black money refers to money earned in cash & then hide abroad so that it remain undisclosed & no tax is charged on such income in India. Following are the key points of this black money act 2015 which were decided to put a check on black money:
All foreign income & assets shall be charged tax at flat rate of 30 % & there would be no deductions, exemptions, set off or carry forward provisions shall apply.
This act shall be applicable even on banks & financial institutions. In case of company, person responsible for managing it shall be liable to tax. However, it is applicable only to the residents of India.
Penalty & punishment:
If a person intentionally evades tax on undisclosed income, he will be charged penalty either three times the amount of tax evaded or 90% of income or asset which is not disclosed. He may also get imprisonment for a period of 3-10 years.
Second and subsequent offence will be punishable with rigorous imprisonment of 3-10 years with a fine of up to Rs. 1 crore.
A person earning foreign income or asset is also required to file a tax return every year, failure of which will result into penalty of Rs 10 lakhs. He may also be prosecuted for a period of 6 months to 7 years. In case of continuing offence, the penalty of 1 crore shall be charged in case of subsequent offence & prosecution for a period of 3 to 10 years.
If the foreign income and asset earned is less than 5 lakhs, than assessee shall not be covered under this black money act 2015. He will not be levied any penalty mentioned in the act & will not be liable for prosecution.
The foreign assets will be valued at current market price prevailing in the country not on the basis of price prevailing when they were acquired.
The bill also provides a short window within which assessee is required to declare all undisclosed income & assets. The time frame for this window will be mentioned in the rules after the passage of bill.
The bill also includes the provision of entering into the agreement with other countries to avoid any kind of double taxation. Such agreements also provides for exchange of information & recovery of tax.
The appeal under this act can be filed to Income tax Appellate tribunal and to high court. Where substantial question of law is involved Supreme Court can also be involved for filing appeal.
The offence will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission for resolution of disputes.
Moreover tax authorities can exercise various powers such as issuing summons, inspection & investigation, impounding of records, production of evidence and enforce attendance, etc.
To see the complete Act click here – Black Money bill 2015