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The Indian Government has enacted The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (No. 22 of 2015). The Black Money Bill  has received the assent of the President on the 26th May, 2015.

This Act has many provisions which are similar to provisions under Income Tax Act, 1961. However, the income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act. Main Features/Highlights of the Act are as under:

Applicability
This act extends to the whole of India.

Effective Date
The Act shall come into force on the 1st day of April, 2016.

Only Resident Persons Covered
The Act covers persons resident in India other than not ordinarily resident in India as defined under section 6 of the Income tax Act, 1961. For example an individual is said to be resident in a previous year if:
(a) he was in India for 182 or more days; or
(b) He was in India in four preceding years for 365 or more days and during the previous year was in India for 60 or more days

Offences by Companies:
Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly

Charge of Tax
The Act prescribes a tax in respect of a resident assessee’s at the rate of thirty per cent on:
(a) total amount of undisclosed income of an assessee from a source located outside India and
(b) the fair market value of an undisclosed asset located outside India

Computation of total undisclosed foreign income and asset (Section 10)
In computing tax incidence, N o deduction shall be allowed in respect of any expenditure or allowance or set off of any loss. However, any income previously assessed under Income Tax Act or  which is assessable or has been assessed to tax under this Act shall be reduced from the value of the undisclosed asset located outside India, if, the assessee furnishes evidence to the satisfaction of the Assessing Officer that the asset has been acquired from the income which has been assessed or is assessable.

In case of an immovable property, the deduction as above, shall be the amount which bears to the value of the asset as on the first day of  the financial year in which it comes to the notice of the Assessing Officer, the same proportion as the assessable or assessed foreign income bears to the total cost of the asset.

Illustration
A house property located outside India was acquired by an assessee in the previous year 2009-10 for fifty lakh rupees. Out of the investment of fifty lakh rupees, twenty lakh rupees was assessed to tax in the total income of the previous year 2009-10 and earlier years. Such undisclosed asset comes to the notice of the Assessing Officer in the year 2017-18. If the value of the asset in the year 2017-18 is one crore rupees, the amount chargeable to tax shall be A-B=C

where, A=Rs.1 crore, B=Rs. (100 x 20/50) lakh= Rs.40 lakh, C=Rs. (100-40) lakh=Rs.60 lakh.

Tax Authorities and Jurisdiction
The tax shall be administered by the income tax authorities acting under the supervision and control of Central Board of Direct Taxes. The jurisdiction of a tax authority under this Act shall be the same as he has under the Income-tax Act.

Provisions related to Assessment, Rectification of Mistakes, Recovery and Appeals are akin to Income Tax Act, 1961.

Penalties:
The much talked part of the Bill is the penal and prosecution provisions which are as under:

Section

Penalty

Incidence

41

Penalty in relation to undisclosed Foreign income and asset

3 times of the tax computed (discretionary)

42

Penalty for failure to furnish Income tax return in relation to foreign income and asset.

Rs. 10 Lakhs (discretionary)

43

Penalty for failure to furnish in return of income, an information or furnish inaccurate particulars about an asset (including financial interest in any entity) located outside India.

Rs. 10 Lakhs (discretionary)

44

Penalty for default in payment of tax arrear

Amount equal to arrears (mandatory)

45

Penalty for failure to:
(a) answer any question
(b) sign statement made
(c) attend or produce books of account or documents

Rs. 50000/- minimum Rs. 200000/- maximum (mandatory)

Sections 42, 43 not to apply in respect of one or more foreign  bank accounts with aggregate value not exceeding 500000/- rupees at any time during the previous year.

Prosecution

49

Punishment for failure to furnish income-tax return in relation to foreign income and asset.

Rigorous imprisonment from 6 months to 7 years with fine

50

Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India.

Rigorous imprisonment from 6 months to 7 years with fine

51

Punishment for wilful attempt to evade tax.

Resident Person-Rigorous imprisonment from 3 Years to 10 years with fine

Any Person- Rigorous imprisonment from 3 months to 3 years with fine

52

Punishment for false statement in verification.

Rigorous imprisonment from 6 months to 7 years with fine

53

Punishment for abetment.

Rigorous imprisonment from 6 months to 7 years with fine

Voluntary Disclosure and Amnesty for undisclosed foreign income and assets
The Act provides for Declaration of undisclosed foreign asset by a person under an amnesty scheme that may be notified by the Central Government on the lines of voluntary disclosure schemes (VDS) under the Income-tax Act, 1961. Such undisclosed foreign asset shall be chargeable to tax at the rate of 30% and in case of undisclosed asset an additional penalty of 100% of such tax shall be levied.

Related Updates:
Amnesty/VDS Provisions under The Black Money Act 2015 Click Here >>
Download The Black Money Act 2015
Click Here >>

 

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Key Highlights, Penalties and Prosecution |31-05-2015|

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