Union Government notified Undisclosed Foreign Income as Assets and imposition of Tax Act, 2015

Jun 1, 2015 10:56 IST

The Union Government on 30 may 2015 notified the Black Money (Undisclosed Foreign Income as Assets) and imposition of Tax Act, 2015. The Act will come into effect from 1 April 2016.

The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 was introduced in Lok Sabha on 20 March 2015 and was passed by Parliament on 13 May 2015.

Provisions of the Bill

• Concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with punishment of rigorous imprisonment up to 10 years.  
• Offence of stashing unaccounted money abroad will be made non-compoundable (A non-compoundable offence is one in which the complainant (the government in this instance) does not enter into a compromise with the accused.
• The offenders will not be permitted to approach the Settlement Commission
• Penalty for such concealment of income and assets at the rate of 300% of tax shall be levied
• The government will give a short window to those stashing black money abroad to declare their wealth, pay taxes and penalty, and escape prosecution under the proposed law.
• Non filing of return or filing of return with inadequate disclosure of foreign assets will be liable for prosecution with punishment of rigorous imprisonment up to 7 years.
• Income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate.  Exemptions or deductions which may otherwise be applicable in such cases shall not be allowed.
• Beneficial owner or beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income.
• Abettors of the above offences, whether individuals, entities, banks or financial institutions will be liable for prosecution and penalty.
• Date of Opening of foreign account would be mandatorily required to be specified by the assessee in the return of income.
• The offence of concealment of income or evasion of tax in relation to a foreign asset will be made a predicate offence under the Prevention of Money-laundering Act, 2002 (PMLA).
• The definition of proceeds of crime under PMLA is being amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.
• The Foreign Exchange Management Act, 1999 (FEMA) will also be amended to the effect that if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of the provisions of this Act, then action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India.

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