Anyone with undisclosed assets and bank accounts abroad will get time up to December 31 to avoid a higher penalty and prosecution.
The Finance Ministry has notified the compliance window under The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Under the window, a person with undisclosed assets (including bank accounts) abroad can make a declaration by September 30. He/she will have time till December 31 to pay tax and a penalty on such assets. Tax will be levied at the rate of 30 per cent while the penalty will be 100 per cent of the tax. Altogether, the person will have to pay 60 per cent of the taxable value or amount declared.
Further, he clarified that the law intends to be a strong deterrent for generation of black money abroad.
After an announcement in the Budget, the law was notified on May 26.
Das also emphasised that international agreements such as FATCA (Foreign Account Tax Compliance Act, a US federal law) will now enable more free flow of information. So, it will not be easy to hide information about assets, including bank accounts abroad.
The Finance Ministry has already made it clear that the compliance window is not an amnesty scheme as no immunity from penalty is being offered. It is merely an opportunity for violators to become compliant before the stringent provisions of the new Act come into force.
No prosecution Once the assets are declared and the tax and penalty are paid, the person concerned will not be prosecuted under the new legislation.
The disclosure will not be used as evidence against the assessee under the Wealth Tax Act, the Foreign Exchange Management Act (FEMA), the Companies Act or the Customs Act. Wealth Tax will also not be payable.
For people who do not comply using the window, the Act provides for stringent penalties and prosecution. For wilful evasion of tax, there will be rigorous imprisonment from three years to 10 years besides a fine.
A person who has not filed a return in respect of foreign assets and bank accounts or income will face punishment of rigorous imprisonment from six months to seven years.
The emphasis is on disclosing the foreign income and assets through an Income Tax Return. There is also a fine of up to ₹10 lakh for not filing returns or for hiding/giving inaccurate information in the returns filed.