The BJP-led NDA Government on Friday introduced in the lok Sabha its ambitious Bill to retrieve blackmoney stashed abroad. The Bill provides for imposition of a 10-year rigorous imprisonment and a whopping 90 per cent tax on the black money unearthed. The Bill introduced by Finance Minister Arun Jaitley provides a limited window of opportunity to offenders to disclose illicit wealth and escape prosecution.
‘The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015’, that is proposed to come into effect from April 1, 2016, provides for taxation at the flat rate of 30 per cent without any exemption, deduction, set off or carry forward losses permissible under the Income Tax Act. The Bill provides for a separate taxation of undisclosed income abroad which will be no longer be taxed under the Income Tax Act.
In the statement of objects and reasons appended to the Bill, Jaitley said a limited window is provided to offenders to file a declaration before a specified tax authority within a period, followed by payment of tax at 30 per cent and an equal amount of penalty. “Upon fulfilling these conditions, a person shall now be prosecuted under the Bill and declaration made by him will not be used as evidence against him in the Wealth Tax, Foreign Exchange Management Tax, the Companies Act or the Customs Act,” it said.
“Wealth Tax shall not be payable on any asset so disclosed. It is merely an opportunity for persons to become tax compliant before the stringent provisions of the new legislation come into force,” Jaitley said. An official release made it clear that the window of opportunity is not an amnesty scheme as no immunity from penalty is being offered. Violation of the provisions will entail stringent penalties.
The penalty for non-disclosure of income or an asset located outside would be equal to three times the amount of tax payable--90 per cent of the undisclosed income or the value of the asset. However, to protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of Rs 5 lakh at any time during the year, will not entail penalty or prosecution.