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Tax and penalty on undisclosed foreign income and assets will be recovered through seizing and disposing assets located in India, Finance Minister Arun Jaitley said after the discussion on Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 in the Lok Sabha on Monday.
The Bill was passed in the Lok Sabha.
It will now be taken up in the Rajya Sabha and then once returned from the upper house Presidential assent will be sought. The new act will come into effect from April 1, 2016.
He also assured that new black money law will not harass students who go overseas for study, besides professional and non resident Indians (NRIs). He made it clear that the government does not want to proceed against trivial violations, but the big fish must not get away.
“Let us not fire from the shoulders of these innocent students in order to make sure that no harsh action is taken on the big fish itself,” he said. The Bill has set a threshold of ₹5 lakh for not initiating action. A detailed circular will also be issued in this regard.
Jaitley said that the government has made two changes in Prevention of Money Laundering Act which will be helpful in implementation of the new black money legislation for income and assets stashed abroad.
It makes offence of not disclosing income as predicate offence and help in seizure of the assets of an assessee here who has been accused of not disclosing foreign income or assets.
A predicate offence is the underlying criminal activity that gives rise to proceeds that may become the subject of a money laundering offence.
The Bill can be divided into two parts: ‘compliance window’ and ‘stringent provisions after the compliance window.’
Jaitley said that there would be short compliance window for persons having undisclosed income abroad to come clean by paying 30 per cent tax and 30 per cent penalty.
Giving an example, he said, there could be a two-month window to declare overseas assets and within six months one would have to pay tax and penalty. Once the compliance window closes, anyone found having undeclared overseas wealth would be required to pay 30 per cent tax, 90 per cent penalty and face criminal prosecution, he said. The Bill also has a provision of imprisonment up to 10 years.
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