Having been in the news for a while now, the black money bill has finally been passed by the government. This article talks about the main features of the bill and how it can reduce the circulation of black money in the market.
In order to curb the rampant black money vogue in India, the Government of India passed ‘The Undisclosed Foreign Income And Assets (Imposition of Tax) Bill, 2015‘ on Wednesday.
The bill aims at enabling the government to prosecute the tax evaders more efficiently. This Bill separates the taxation of undisclosed income with regards to the foreign income and assets, which shall henceforth not be taxed under the Income Tax Act. Therefore, the new Bill which was passed has more stringent rules and regulations, in order to plug the earlier loopholes through which evasion occurred.
The key points of this Bill are:
1. This Act applies to all residents of India and applies to both foreign income and assets.
2. The rate of tax of such undisclosed foreign income and assets has been levied at a flat rate of 30%.
3. In event of non-disclosure of foreign income and assets, the violator shall be charged with a penalty of three times the amount of his/her tax (or 90% of the value of of the foreign income and asset), which is over and above the 30% payable tax. A penalty of INR 10 lakh is liable to the violators who are unable to furnish returns.
4. Upon willful attempt of evasion, in addition to a fine, the violator stands a potential of facing from 3 to 10 years of imprisonment. Not being able to furnish a return with regards to foreign assets and bank accounts or income can earn the violator a term of six months to seven years of imprisonment. If a violator seeks to make a false return or account or statement or declaration, then he/she faces imprisonment from six months to seven years
5. In order to safeguard those who hold a small amount of balance abroad, evasion of which may be on accounts of mere oversight, the failure to report to bank accounts with a maximum balance of INR 5 lakh does not earn either penalty or prosecution.
6. The Bill provides a leniency for violators, claiming a one time compliance opportunity (for a limited time period), who may file a disclosure for the purposes of income tax, followed by a payment of tax levied at the aforementioned 30% tax rate and an equal amount of by way of penalty. Such people shall not be prosecuted under the Act.
With the implementation of these rules, the government hopes to put an end to the the black money circulations.