The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 received the assent of President on 26.05.2015. The objective of the Act is to make provisions to deal with the problem of the Black money that is undisclosed foreign income and assets, the procedure for dealing with such income and assets and to provide for imposition of tax on any undisclosed foreign income and asset held outside India.
The Act provides as follows:
- The provisions of the Act shall come into force on the 1st of April, 2016.
- Defines “Undisclosed Asset located outside India” as an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory.
- For every assessment year commencing on and from the 1st of April, 2016, every assessee shall be charged a tax in respect of his total undisclosed foreign income and asset of the previous year @ 30% of such undisclosed income and asset, provided “value of an undisclosed asset” means the fair market value of an asset (including financial interest in any entity). As well as, a penalty of a sum equal to 3 times the tax computed, in addition to the payment of tax.
- The scope and computation of total undisclosed foreign income and asset.
- the powers and functions of tax authorities under this Act shall be performed by the income-tax authorities specified in Section 116 of the Income-tax Act, and shall have same powers as are vested in a court under the Code of Civil Procedure, 1908 while trying a suit.
Notice/ Order/ Appeals
- Assessing Officer shall have power to serve notice on the assessee to provide details of any income or asset he may require for the purpose of this Act, and assess the undisclosed foreign income and asset and determine the sum payable by the assessee within 2 years from the date of issue of notice.
- tax authority may amend the order of assessment passed by the Assessing Officer, provided that he shall not make any amendment, which has the effect of enhancing the undisclosed foreign income and asset or reducing a refund or otherwise increasing the liability of the assessee, without giving an opportunity to the assessee of being heard.
- a notice of demand shall be served upon the assessee by a tax authority to demand any sum payable in consequence of any order made under this Act, which shall be payable to the credit of Central Government.
- any person aggrieved with the order of assessment passed by the Assessing Officer may appeal to the Commissioner (Appeals), who shall dispose of the appeal as expeditiously as possible and within a period of one year from the end of the financial year in which the appeal is preferred.
- any assessee aggrieved by an order passed by the Commissioner (Appeals) may appeal to the Appellate Tribunal against such order, which shall exercise the same powers and follow the procedure as it exercises and follows in hearing and making an order on any appeal under the Income-tax Act.
- an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The appeal shall be heard by a Bench not less than two Judges of the High Court and shall be decided in accordance with the opinion of such Judges or if the Bench is of more than two Judges, by the majority of such Judges.
- an appeal shall lie to the Supreme Court from any judgment of the High Court, provided that the High Court certifies it to be a fit case for appeal to the Supreme Court.
- even though any appeal is preferred to the High Court or the Supreme Court, the tax assessed in accordance with the provisions of this Act shall be paid by the assessee.
Recovery of tax dues
- an assessee shall be deemed to be an assessee in default, if the tax arrear is not paid within the scheduled time. The Assessing Officer or the Tax Recovery Officer may require the employer of the assessee to deduct from any payment to the assessee such amount as is sufficient to meet the tax arrear from the assessee, and the employer shall comply with the requisition and shall pay the sum so deducted to the credit of the Central Government. The Assessing Officer or the Tax Recovery Officer shall grant a receipt for any amount paid in compliance with a notice issued, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid. The Assessing Officer or the Tax Recovery Officer may apply to the court, in whose custody there is money belonging to the assessee, for payment of the tax arrears from the assessee.
- provision for recovery of tax dues in case of a company in liquidation. Also, liability of manager of a company jointly and severally for payment of any amount due, if the amount cannot be recovered from the company.
- provision for recovery of tax dues from the participants or representative assessee of a deceased participant of an incorporated body.
- recovery of tax through State Government, where the responsibility is entrusted to a State Government under Section 258(1); of the Constitution.
- Interest for default in furnishing return of income under Section 139(1); of the Income-tax Act, and payment or deferment of advance tax on any undisclosed income from a source outside India.
- penalty of Rs 10 lakh for failure to furnish return in relation to foreign income and asset, provided that the aggregate balance in one or more bank accounts exceeds a value equivalent to five hundred thousand rupees at any time during a previous year.
- penalty of Rs 10 lakh for failure to furnish in return of income, an information or furnish inaccurate particulars about an asset (including financial interest in any entity) located outside India, provided that the aggregate balance in one or more bank accounts exceeds a value equivalent to five hundred thousand rupees at any time during a previous year.
- penalty of an amount equal to the amount of tax arrear for default in the payment of arrear.
- penalty of 50,000/ to 2 lakh rupees where a person fails to answer any question put to him by a tax authority, attend or produce books of account or documents at the place or time, or any other non-cooperation.
Offences and prosecutions
- rigorous imprisonment for a term not less than six months but which may extend to seven years and with fine for wilful failure to furnish in due time the return of income, failure to furnish any information required under the Act, regarding any asset (including financial interest in any entity) located outside India held by a person, resident other than not ordinarily resident in India.
- rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine for wilful attempt to evade tax.
- punishment for false statement in verification, abetment to deliver false information, offences by companies (every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be liable), second and subsequent offences thereof.
Tax Compliance for Undisclosed Foreign Income and Assets
- declaration shall be made to the Principal Commissioner or the Commissioner in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act on or after the date of commencement of this Act but on or before a date to be notified by the Central Government in the Official Gazette by the person holding such asset, which shall require payment of tax @ 30% of the value of such undisclosed asset along with a penalty @100% of such tax. Declaration would exempt the person from facing any prosecution.
- tax paid in pursuance of a declaration shall not be refundable.
- where any declaration has been made but no tax and penalty has been paid within the time specified, the value of such asset shall be chargeable to tax under this Act in the previous year in which such declaration is made.
Agreement with Foreign Countries
- provides power to the Central Government to enter into an agreement with the Government of any other country, for exchange of information for the prevention of evasion or avoidance of tax on undisclosed foreign income chargeable under this Act.
Rounding off of Income
- the amount of undisclosed foreign income and asset computed in accordance with this Act shall be rounded off to the nearest multiple of one hundred rupees.
Cognizance of offences
- no court inferior to that of a metropolitan magistrate or a magistrate of the First Class shall try any offence under this Act.
- no suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act.
-Ministry of Law & Justice