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Thursday, June 4, 2015


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Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015 (The black money bill) was passed by the Rajya Sabha on Wednesday Dt. 13.05.2015.  It is awaiting Presidents assent.

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 new legislation.

Main features of the  Bill :
1.      Rigorous imprisonment
Ø  Those who conceal income and assets and indulge in tax evasion in relation to foreign assets can face rigorous imprisonment up to 10 years.

2.    Non compoundable

Ø  The offence will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission for resolution of disputes.

3.   Tax & penalty

Ø  Undisclosed foreign income or assets shall be taxed at the flat rate of 30 per cent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961.

Ø  Further concealment of income in relation to a foreign asset will attract penalty equal to three times the amount of tax (90 per cent of the undisclosed income or the value of the undisclosed asset).

4.   Offence liable to confiscation

Ø  The Bill also proposes to make concealment of income and evasion of tax in relation to a foreign asset a 'predicate offence' under the Prevention of Money Laundering Act, which will enable the enforcement agencies to attach and confiscate the accounted assets, held abroad and launch proceedings.

5. Non filing or inadequate disclosure may lead to imprisonment

Ø  Non-filing of income tax returns or filing of returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment of up to 7 years.

6.  Protection for minor balances

Ø  Failure to report bank accounts with a maximum balance of up to Rs.5 lakh at any time during the year will not entail penalty or prosecution.

7.  Liability to be computed on current price and not cost

Ø  The tax liability on an overseas property would be computed on the basis of its current market price, not the price at which it was acquired.

8.  Short window to come clean

Ø  The Income Tax assesses with overseas assets will get a one-time opportunity for declaring them. The time-frame of the short window will be notified.

9.  Additional penalty for non declaration after the short window is over

Ø  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 where the assesse has filed a return of income, but has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.

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