1. Tainted money abroad: Bill seeks to make banks liable

Tainted money abroad: Bill seeks to make banks liable

Holding tax-evaded funds abroad would bring stringent punishment not only to Indians found guilty of such offence but also to banks...

By: | New Delhi | Updated: March 21, 2015 5:25 AM

Holding tax-evaded funds abroad would bring stringent punishment not only to Indians found guilty of such offence but also to banks, consultants and financial institutions aiding such practices, as per provisions of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, tabled in the Lok Sabha on Friday.

Once the Bill is enacted, all instances of overseas assets and income which have evaded tax payments in India will be dealt with under its stringent provisions and not under the Income Tax Act, which provides for some discretion to tax officials in invoking penalty provisions. The Bill covers unreported financial interest in any overseas entity.

Finance minister Arun Jaitley had said in the Budget speech that a Bill to check unaccounted wealth held abroad will be introduced in the current session.

In addition to a flat 30% tax, the Bill provides for a penalty of 90% of the unreported income or value of the undisclosed asset. No exemption or deduction or set off of any carried forward losses which may be admissible under the Income-tax Act will be allowed. Failure to furnish return of foreign income or assets will attract a penalty of R10 lakh.

India, Undisclosed Foreign Income and Assets, Undisclosed Foreign Income and Assets Bill, Imposition of Tax, Lok Sabha, Income Tax Act, Arun Jaitley, Central Board of Direct Taxes

The Bill prescribes stronger punishment for willful attempts to evade taxes on foreign assets or income, differentiating it from a mere failure to report such holdings. Willful attempt to evade taxes will attract rigorous imprisonment of three to ten years in addition to the fine. Not filing a return of foreign asset, income or bank account will attract rigorous imprisonment from six months to seven years. The same punishment is prescribed for cases where the accused has filed an income return, but has not disclosed foreign asset or has given inaccurate details. Beneficial ownership in any unreported foreign asset is also covered by the new provisions.

Central Board of Direct Taxes (CBDT) chairperson Anita Kapur had recently said that the Bill would introduce a “rebutable presumption” that the undisclosed foreign asset constitutes concealed income. Assessees will be allowed an opportunity to present their views on why the asset was not disclosed.

“Abetting or inducement of another person to make a false return or a false account or statement or declaration under the Act will be punishable with rigorous imprisonment from six months to seven 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,” said a statement issued by the finance ministry.

Non-disclosure of foreign asset or income of up to R5 lakh due to oversight will not attract any penalty or prosecution. Those having unreported foreign investments will get a one-time compliance opportunity to escape prosecution by declaring such investments and paying 30% tax and another 30% penalty on it. The ministry clarified that this was not an amnesty scheme as there was no waiver on penalty.

“It is merely an opportunity for people to come clean and become compliant before the stringent provisions of the new Act come into force,” it said.

Revenue secretary Shaktikanta Das said the Bill will provide a strong deterrent against generation of unaccounted wealth. He explained that the benefit of the compliance window incorporated in the Bill will not be available in cases where investigation or any other due process of law is already underway.

The Bill, however, has incorporated safeguards to ensure that the people are not harassed under the harsh provisions meant to check the problem of black money, which was one of the much debated issues during the 2014 election. Opportunity of being heard, necessity of taking the evidence produced by an accused into account, recording of reasons, passing of orders in writing and limitation of time for various actions of the tax authority are among them. More safeguards will be provided in the rules.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top