The Union Cabinet has approved the proposed black money Bill that provides for harsher punishment for holders of unaccounted wealth. The Bill will be tabled in the Lok Sabha the current session of Parliament.
The cabinet, chaired by PM Narendra Modi, also approved a proposal for India to sign an inter-government agreement with the US for confidential sharing of financial information regarding the people of each country aimed at preventing tax evasion, sources said. The proposed pact under the US Foreign Account Tax Compliance Act (FATCA) is likely to be signed in March itself.
Finance minister Arun Jaitley said earlier in the day that the Bill on black money will be introduced in the current session itself. Scrutiny in the case of people alleged to be holding black money in foreign accounts will be completed by March 31, he said. The Bill, however, will allow an opportunity for black money hoarders to disclose overseas assets, pay taxes on it along with a 300% penalty in order to avoid prosecution and imprisonment.
Central Board of Direct Taxes chairperson Anita Kapur recently told reporters the new law will introduce a “rebutable presumption” that the undisclosed foreign asset constitutes concealed income. Assessees will be allowed an opportunity to present views on why the asset was not disclosed. “The very fact that one has not disclosed one’s foreign asset will make one liable for prosecution. If we detect an unreported overseas asset, we would quantify the income that escaped assessment and will bring it to tax at maximum marginal rate (30%),” said Kapur. The new law will mandate reporting of movable and immovable assets abroad.
The current law allows tax officers to levy penalty of 100-300%. The new law will disallow that discretion and propose a flat 300% penalty. This offence will also become a predicate offence to money laundering. Under Prevention of Money Laundering Act, the government can seek details about assets of an individual from other nations. Under the proposed law, concealment of income and assets and tax evasion in relation to foreign assets will be prosecut-able with jail of up to 10 years.