The Ministry of Law and Justice has notified the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 which aims at dealing with the problem of the Black money (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 and for matters connected therewith or incidental thereto.
The Act provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the Act. Section 85 of the Act empowers the Central Board of Direct Taxes to make rules for carrying out the provisions of this Act, which should be notified in due course.
| Event | Date |
| Introduction in Parliament | 20 March 2015 |
| Passed in Lok Sabha & Rajya Sabha | 13 May 2015 |
| President’s Assent | 26 May 2015 |
| Notification in Gazette | 27 May 2015 |
| Comes into Force on | 1 April 2016 |
Salient Features
| Scope | The Act will apply to all persons resident in India.Provisions of the Act will apply to both undisclosed foreign income and assets (including financial interest in any entity). |
| Rate of tax | Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed. |
| Penalties | Violation of the provisions of the Act will entail stringent penalties:
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| Prosecutions | The Bill proposes enhanced punishment for various types of violations.
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| Safeguards | The principles of natural justice and due process of law have been embedded in the Act by laying down the requirement of mandatory issue of notices to the person against whom proceedings are being initiated, grant of opportunity of being heard, necessity of taking the evidence produced by him into account, recording of reasons, passing of orders in writing, limitation of time for various actions of the tax authority, etc. Further, the right of appeal has been protected by providing for appeals to the Income-tax Appellate Tribunal, and to the jurisdictional High Court and the Supreme Court on substantial questions of law.To protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of upto Rs.5 lakh at any time during the year will not entail penalty or prosecution.Other safeguards and internal control mechanisms will be prescribed in the Rules. |
