The lok Sabha on Monday passed a Bill to deal with black money stashed abroad through high penalty and criminal prosecution. Piloting the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, Finance Minister Arun Jaitley said there would be a short compliance window for people having undisclosed income abroad to come clean by paying 30 per cent tax and 30 per cent penalty. Jaitley also informed the House, that the Government will soon bring a new Benami Bill to curb domestic black money.
The Black Money Bill proposes that once the compliance window closes, anyone found having undeclared overseas wealth would be required to pay 30 per cent tax, 90 per cent penalty and face criminal prosecution. For those wanting to come clean, Jaitley said there would be a compliance window in two parts, to declare assets and to pay 30 per cent tax and 30 per cent penalty.
Citing an example, he said, there could be a two-month window to declare overseas assets and within six months, one would have to pay tax and penalty. Jaitley said the law will help bring black money in the declared economy, improve tax collections and would eventually facilitate lowering of tax rates.
Noting that this Bill was specifically to target black money stashed abroad, he said a separate Benami Bill will soon be brought before the Cabinet to tackle domestic black money. “This law will act as a deterrent...It will act as a deterrent and help us in getting the assets back by people declaring them,” he said, adding the law also had a provision for attachment of equivalent properties in India.
Rejecting the Opposition charge that the stringent provisions could result in harassment of innocent people and students, he said: “We don’t want to proceed against trivial violations. But then the big fish must not get away in their garb. let us not fire from the shoulders of these innocent students in order to make sure that no harsh action is taken on the big fish itself.”
Earlier while moving the Bill for consideration, Jaitley turned down the Opposition’s demand for referring it to the Standing Committee saying delay in enacting the law would provide opportunity to offenders to transfer unaccounted overseas wealth to unknown destinations.
The Finance Minister took a jibe at the Opposition saying: “When we are taking steps, don’t develop cold feet. For the last 11 months, you have been asking what steps is the Government taking. Now walk the talk and support the Bill and drop the demand for sending it to the Standing Committee.”
On fears that innocent people could get penalised, he said no action would be taken against people with Rs 5 lakh or equivalent amount in their overseas bank accounts. “We will make sure that statutory guidelines are also issued by the CBDT...We will make sure that any innocent person, who does a lot of international travelling, are not covered under this...If you hold (property) unlawfully, then you are liable for consequences,” he said, adding the people can lawfully hold assets abroad.
Taking a jibe at the Opposition, Jaitley said that he cannot issue a circular that “whoever goes to Madison Square should not be prosecuted. But I will certainly make sure that innocents are not the target.”
On whether it was an amnesty scheme, Jaitley replied in the negative. “The question is, is it an amnesty schemeIJ The answer is no. In amnesty scheme, you just take the tax and pardon the people. Here we are imposing a fresh tax, therefore giving a compliance window. Amnesty schemes also have a provision of naming and shaming. There is no provision here,” he said.
“As regards the Benami Bill, the redrafted Act is at a very advanced stage... A more modern Benami Bill has been drafted. It will reach the Cabinet any day,” Jaitley said. Apart from confiscation, the Bill would provide for prosecution and would aim to act as a major avenue for blocking generation and holding black money in the form of benami property, especially in real estate.
Jaitley said the inclusion of the parallel economy of black money into the main economy, would help the Government to lower tax rates. “The need to curb domestic black money is extremely important.
We need to bring slowly more and more of our economy into the declared economy. This has ability to bring up tax collection, GDP, enables to help the Government to bring down the taxation.
The Benami Transactions (Prohibition) Act was earlier enacted in 1988, but the rules under that Act could not be formulated due to inherent infirmities in the Act. Following this, in 2011 the Government introduced in Parliament a Benami Transactions (Prohibition) Bill, which proposed replacing the 1988 Act. The Bill was referred to the Standing Committee on Finance for examination, which submitted its report in June 2012. However, the Bill lapsed with the dissolution of 15th lok Sabha.