Black money law: CBDT clarifies on declaration of foreign assets

The Central Board of Direct Taxes (CBDT) on Thursday clarified the new black money law’s stance on foreign assets created by private trusts and pension monies deposited in foreign bank accounts, among other things.

In a circular issued on Thursday, the CBDT clarified on 27 fresh set of queries. It has elaborated on the treatment of interest incomes deposited in foreign bank account of a non-resident who later turned into a resident; what does a person do if he has a foreign bank account since 2000 made out of undisclosed income taxable in India and he does not have bank statements prior to 2011, among others.

The FAQs are timely as the declaration window under the black money law closes on September 30.

On the query revolving around a private trust created outside India by a settlor out of undisclosed income taxable in India, the CBDT has detailed the options available for declaration in a situation where this trust has set up a company holding 100 per cent shares. In this case, it has clarified that a settlor can make the declaration — under the black money law — in the capacity of a beneficial owner in respect of assets of the trust.

Alternatively, the trustee holding assets on behalf of beneficiaries can make the declaration in the capacity of a representative assessee. The trustee is eligible for declaration even where he is a non-resident. In respect of the assets declared, immunity will be available to the settlor, trustee, and the beneficiary, the circular said.

The CBDT had issued the first set of FAQs around the black money law in July this year. It had then clarified 32 queries regarding tax compliance provisions under that law.

The black money law — The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 — was enacted with an objective of tackling black money stashed abroad.

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