The finance ministry on Friday warned of a crackdown on individuals and entities holding unaccounted wealth abroad after the one-time compliance window that ended on September 30 elicited poor response.
Only 638 returns were received under the three-month compliance window offering R3,770 crore of previously unreported foreign wealth for 60% tax and penalty in return for immunity from prosecution under the stringent black money law.
Economic affairs secretary Shaktikanta Das tweeted that those who did not declare foreign wealth under compliance scheme have underestimated the power of information exchange and that they would regret.
India had on September 30 set in motion a comprehensive information exchange agreement with the US deal to tackle offshore tax evasion. The income tax department, which sent the first tranche of information about Americans holding financial assets in India to the US revenue authorities, is awaiting similar information about the financial assets Indians have in the US. The move is part of the effort of tax authorities to collect information about assets held abroad by people that would help in accurately assessing their taxable income.
“Fight against black money is a part of economic reforms. As a country, we can’t allow ghost economy to undermine real economy and growth,” Das said in another tweet. He was the revenue secretary when the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, came into force.
India will also benefit from a multilateral automatic exchange of information agreement, which will come into force from 2017.
Under the black money law, having hidden foreign wealth would fetch up to 10 years of rigorous imprisonment besides tax and penalty amounting to 120% of the value of such wealth, besides its confiscation. Even non-disclosure of foreign assets which are acquired using tax paid funds would attract a Rs 10-lakh penalty under the Indian black money law.