Holding out an olive branch, the Government on Monday said persons using special window to declare assets abroad will be given immunity from prosecution under FEMA, Prevention of Money laundering Act and four other laws.Also, persons not being informed of prior information with Government on their assets abroad will be dealt under the Income Tax Act and not under the stringent Black Money law.
The Frequently Asked Questions (FAQs) issued by Finance Ministry said the 90-day compliance window till September 30 provided to foreign asset holders to come clean will, however, not guarantee immunity for wealth generated from corruption.The window will not be available to those against whom notices have been issued on or before June 30, searches carried out or information received from foreign states.
The Finance Ministry said if an NRI acquires a property abroad using the income accrued or received in India without paying tax, then the asset would be treated as undisclosed foreign asset.On foreign bank accounts, the FAQ said the taxable value would be the sum of all deposits made in the account since its opening and “not on the balance as on date”.
Non-disclosure of assets even if acquired from taxed and legitimate income, will attract a penalty of Rs10 lakh.However, any asset acquired out of income not chargeable to tax in India will not be defined as undisclosed asset.In a breather to students, the Finance Ministry said foreign bank accounts having less than Rs5 lakh deposit at any time during previous year would not attract any penalty.
However, all foreign assets have to be necessarily disclosed even if their fair market value is nil.With regard to applicability of the capital gains tax on foreign assets declared by assessee, the Ministry said that “the declarant will be liable for capital gains under the Income-Tax Act on sale of such asset in future”.
The clause, tax experts say, will leave almost nothing with the assessee who would have paid 60 per cent of the fair market value of the property under the compliance window and would again pay capital gains tax when property is sold.The FAQ made it clear that after the declaration is made, the Principal Commissioner/Commissioner would enquire whether any information has been received by the competent authority in respect of the assets declared.
“Apart from this no other enquiry will be conducted by him at the time of declaration.”The ministry said that “beneficial owner” of the assets would be required to declare the assets. For the purpose of the Act, the “beneficial owner” would mean an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit.
With regard to the assets about which the Government has prior information, the ministry said, “The person cannot make a declaration of an undisclosed foreign asset where the central government has received an information in respect of such asset under the DTAA.