Black Money Act

Why in news

• Recently a tax tribunal ruled that the tax-authorities can use the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 to go after even those secret foreign bank accounts which were closed well before the new law came into existence.

More about the news:

• It is significant development on the recent Pandora paper leaks as many of the offshore countries accounts revealed under it were closed before 2015.

About the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act:

• It aims to curb black money, or undisclosed foreign assets and income and imposes tax and penalty on such income.
• It applies to Indian residents and seeks to replace the Income Tax (IT) Act, 1961 for the taxation of foreign income.
• It penalizes the concealment of foreign income, and provides for criminal liability for attempting to evade tax in relation to foreign income.

Salient provisions:

• Tax rate:
  • A flat rate of 30 per cent tax would apply to undisclosed foreign income or assets of the previous assessment year.
  • No exemption, deduction or set off of any carried forward losses (as provided under the IT Act) would apply.
• Scope of income to be taxed:
  • The total undisclosed foreign income and asset of an individual would include: (i) income, from a source located outside India, which has not been disclosed in the tax returns filed; (ii) income, from a source outside India, for which no tax returns have been filed; and (iii) value of an undisclosed asset, located outside India.
• Penalty for offences:
  • Undisclosed foreign income/assets: The penalty for non-disclosure of foreign income or assets would be equal to three times the amount of tax payable, in addition to tax payable at 30%.
  • Failure to furnish returns: The penalty for not furnishing income tax returns in relation to foreign income or assets is a fine of Rs 10 lakh.
  • Second time defaulter: Any person, who continues to default in paying tax that is due, would be liable to pay an amount equal to the amount of tax arrears.
• Prosecution for certain offences:
  • Wilful attempt to evade tax: The punishment would be rigorous imprisonment from three to 10 years, and a fine.
  • Failure to furnish returns: or non-disclosure of foreign assets in returns: The punishment is rigorous imprisonment of six months to seven years, and fine.
  • Liability of company: For any offence under this Act, every person responsible to the company is to be liable for punishment.

PRELIMS QUESTION

Which of the following statements is/are correct regarding ‘Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act’?

1. It is applicable only to citizen of India

2. It provides for criminal liability for attempting to evade tax in relation to foreign income

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer