Jail, huge fines for hiding income

The government has proposed new legislation to deal with the black money menace by making concealment of such income and assets in foreign destinations a non-compoundable offence punishable by up to 10 years imprisonment.

Facing criticism on the issue, the government expressed its resolve to curb ill-gotten money by proposing a penalty of 300 per cent on tax on concealed income and assets.
“A considered decision has been taken to enact a comprehensive new law on black money to specifically deal with such wealth stashed away abroad. The bill in this regard is proposed to be introduced in the current session of Parliament,” said Finance Minister Arun Jaitley while presenting the Budget.

As per a key feature of the proposed bill, offenders would not be able to approach the settlement commission.  Banks and financial institutions, including individuals, would also be liable for prosecution and penalty.

Any date of opening of foreign account would be required on a mandatory basis to be specified by the assessee in the return of income, he said. Keeping undisclosed money in foreign institutions would be made a predicate offence, said the minister.

The Foreign Exchange Management Act, 1999, and the Prevention of Money Laundering Act, 2002, would also be amended in this regard.  “Non-filing of return or filing of return with inadequate disclosure of foreign assets will be punishable with rigorous imprisonment of up to seven years,” he said.

“A more comprehensive Benami Transactions (Prohibition) Bill will also be introduced in the current session of Parliament,” said Jaitley.  The law would enable confiscation of “benami” property and provide for prosecution, thus blocking a major avenue for generation and holding of black money in the form of “benami” property, especially in real estate.

He also said steps would be taken to incentivise transactions through debit and credit cards. According to the measures, quoting of PAN will become mandatory for any purchase or sale exceeding Rs 1 lakh in value. There will be prohibition on acceptance or payment of advance of Rs 20,000 or more in cash for purchase of any immovable property, he said.

A Supreme Court-appointed Special Investigation Team (SIT) had earlier recommended mandatory quoting of PAN for cash or cheque transactions to curb instances of slush money, generated largely through unregulated mining, Ponzi schemes, iron-ore exports, and misuse of export-import routes—major areas prone to black money transactions.
The SIT is to complete its probe into the names submitted to it by March 31.