The government Friday introduced a Bill, specifically dealing with illicit money stashed in foreign banks abroad, providing for separate taxation of any undisclosed foreign income or assets, in a bid to curb the generation of black money in the country.
The Undisclosed Foreign Income and Assets (Imposition of Tax), 2015, proposes to tax the undisclosed foreign income or assets at the flat rate of 30 per cent while levying a penalty at the rate of 90 per cent of the undisclosed income or asset, three times the amount of the tax payable, an official statement said. The penalty will be in addition to the 30 per cent tax payable.
However, if a taxpayer holding foreign accounts with a balance of up to Rs 5 lakh has failed to report the same due to “oversight or ignorance”, it will not entail penalty or prosecution. As such, a failure to furnish return in respect of foreign income or assets will attract a penalty of Rs 10 lakh.
In Budget 2015-16, finance minister Arun Jaitley had announced that the government would bring in a law for dealing with the illicit money parked abroad.
“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 official statement said.
The Bill has also proposed a one-time compliance opportunity for all those who have stashed black money abroad. It also proposes stringent action against offenders, including rigorous imprisonment of three to 10 years.
Last month, an investigation by The Indian Express revealed 1,195 Indian HSBC clients, roughly double the 628 names that French authorities gave to the government in 2011.
The BJP-led government has been under attack from the opposition for not delivering on its promise to bring back black money. The BJP had made this a major issue during the Lok Sabha poll campaign.
In case of abetment or inducement for a false account or statement will be punishable with rigorous imprisonment between six months and seven years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income. These provisions will also apply to beneficial owners.
However, certain safeguards have also been built it including 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, limitation of time for various actions of