NEW DELHI, Mar 20:
Blackmoney stashed abroad will entail a 10 years rigorous imprisonment and a whopping 90 per cent tax under the proposed stringent law that provides for a limited window of opportunity to offenders to disclose illicit wealth and escape prosecution.
Acting on his Budget promise, Finance Minister Arun Jaitley introduced in the Lok Sabha today an 88-clause Bill that seeks to unearth blackmoney and assets stashed abroad, an issue the BJP and Prime Minister Narendra Modi had campaigned against in the Lok Sabha elections.
‘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 says 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 comes 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.
Wilful attempt to evade tax in relation to foreign income or asset will attract a rigorous imprisonment of 3 years to 10 years and a fine. Failure to furnish a return in respect of foreign assets and bank accounts or income will be punishable with RI of 6 month to 7 years.
The same term of punishment is prescribed in cases where the assessee has filed a return of income but has not disclosed the foreign asset or has furnished inaccurate particulars, says the provisions of the Bill.
Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs 10 lakh. The same amount of penalty is prescribed for cases where although the assess has filed a return of income, but he has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.
Jaitley later told reporters that the Bill would be considered by Parliament in the second leg of the Budget session.
The provisions of the new Bill will also apply to beneficial owners or beneficiaries of such foreign assets.
Abetment or inducement of another person to make a false return, account, statement or declaration will be punishable with RI of 6 months to 7 years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.
As a measure of safeguard, the principals of natural justice and due process of law have been embedded in the Bill by laying down the requirement of mandatory issue of notices to persons against whom proceedings are being initiated.
They would also be given an opportunity of being heard along with necessity of taking the evidence produced by them into account, with recording of reasons, passing of orders in writing and limitation of time for various actions of tax authority.
Further the right of appeal has been protected by providing for appeals to the Income Tax Appellate Tribunal and to jurisdictional High Courts and the Supreme Court on substantial questions of law.
The Bill also proposes to amend the Prevention of Money Laundering Act, 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under the PMLA.
The Bill provides that second and subsequent offence will be punishable with RI of 3 years to 10 years and with a fine of up to Rs 1 crore.
It also empowers the Government to enter into agreements with other countries, specified territories and associations outside India for exchange of information, recovery of tax and avoidance of double taxation.
Jaitley said stashing away of blackmoney abroad by some people with intent to evade taxes has been a matter of deep concern to the nation.
“Evasion of tax robs the nation of critical resources necessary to undertake programmes for social inclusion and economic development.
“It also puts a disproportionate burden on honest tax payers as they have to bear the brunt of higher taxes to make up for the revenue leakage caused by evasion. The money stashed away abroad by evading tax could also be used in ways which could threaten the national security,” he said.
Referring to Supreme Court’s concern on the issue and the measures sought by the Special Investigating Team (SIT) constituted by it to curb the menace, the Finance Minister said internationally a new regime is fast taking shape and India is a leading force in this effort.
An official release said in keeping with the commitment of the Government for focused action on blackmoney front, an unprecedented and multi-pronged attack has been launched to root out the menace of blackmoney.
“The Government is confident that this new law will act as a strong deterrent and curb the menace of blackmoney stashed abroad by Indians,” it said. (PTI)
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