Concealing foreign assets or income can lead to jail up to 10 years with a maximum fine of ₹1 crore along with tax and penalty of up to 120 per cent, if the Bill on black money introduced in the Lok Sabha on Friday is enacted into law.
The ‘Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015’, introduced by Finance Minister Arun Jaitley, is applicable to both undisclosed income and assets (including financial interest in any entity) stashed abroad.
The Bill provides for separate taxation of any undisclosed foreign income and assets under stringent provisions of the proposed legislation.
To curb the menace, the Bill proposes to not only cover a person having undisclosed income or assets abroad, but also beneficial owners or beneficiaries of such assets, besides banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.
In a kind of amnesty scheme, the Bill proposes a ‘one-time compliance’ window for a limited period to any individual who has undisclosed assets abroad.
The scheme will allow a declaration to be made before the tax authority within a specified period, followed by payment of tax at the rate of 30 per cent and an equal amount by way of penalty. Once declared and the tax and penalty paid, the person concerned will not be prosecuted under the new legislation.
However, the government has clarified 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, it said.
Tax on concealed income or assets will be levied at a flat rate of 30 per cent.
Also, there will be penalty equal to three times the amount of tax payable, i.e. 90 per cent of the concealed income or value of the undisclosed asset.
There will be no exemption, deduction or set-off of any carried forward losses.
The Bill proposes to come down hard on wilful attempt to evade tax or file returns in relation to foreign income or assets. Wilful tax evasion will invite rigorous imprisonment from three years to 10 years, besides a fine.
A person who has not filed a return in respect of foreign assets and bank accounts or income will face rigorous imprisonment for six months to seven years.
There is also a fine up to ₹10 lakh for not filing returns or hiding/giving inaccurate information in the returns. The same term of punishment is prescribed for cases where he assessee has filed a return, but has not disclosed foreign assets, or has furnished inaccurate particulars of the same.
The Bill also proposes to amend the Prevention of Money Laundering Act (PMLA), 2002 to make offence of tax evasion a scheduled offence under the Act.