Blackmoney bill in LS;10 yrs jail for concealing foreign funds

A Bill proposing to prosecute those stashing illicit wealth abroad with 10 year rigorous imprisonment and providing for a window to persons seeking to come clean on such undisclosed assets, was introduced in Lok Sabha today.

Finance Minister Arun Jaitley introduced 'The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015,' proposing that it would come into effect from April 1, 2016.
"Recognizing the limitations of the existing legislation, it is proposed to introduce a new legislation to deal with undisclosed assets and income stashed away abroad," said the Statement on Objects and Reasons of the Bill.

The Bill provides for criminal liability with enhanced punishment with 3-10 year imprisonment for willful attempt to evade tax in relation to foreign income, along with a fine.

Second and subsequent offence would be punishable with rigorous imprisonment for a term of 3-10 years with a fine of Rs 25 lakh to Rs 1 crore.

"In prosecution proceedings, the wilful nature of the default shall be presumed and it shall be for the accused to prove the absence of the guilty state of mind," it added.
The Bill also provides for a penalty of three times the amount of tax for concealment of income in relation to a foreign asset.

Further, a penalty of Rs 10 lakh would be levied for failure to furnish return of income by persons holding foreign asset, failure to disclose foreign asset in the returns or furnishing of inaccurate particulars of such asset.

The Bill proposes a limited window to persons who have any undisclosed foreign assets who wish to come clean.

"Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 per cent and an equal amount by way of penalty," it said.

"It is merely an opportunity for persons to become tax compliant before the stringent provisions of the new legislation come into force," the statement said.

The Bill, however, protects persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, from criminal consequences.
"Evasion of tax robs the nation of critical resources necessary to undertake programmes for social inclusion and economic development. It also puts a disproportionate burden on the honest tax payers as they have to bear the brunt of higher taxes to make up for the revenue leakage caused by evasion," it said.

Under the measure, the tax authorities have been vested with powers of discovery and inspection, issue of summonses, enforcement of attendance, production of evidence and impounding of books of account and documents.

It also provides for adequate safeguards, making it mandatory to issue notices and grant opportunity to the assessee of being heard.

Appeal to the ITAT, High Courts and Supreme Court has also been provided to safeguard the interest of the assessee.

As per the Bill, the Government have been empowered to enter into agreements with other countries or jurisdictions for exchange of information, recovery of tax and avoidance of double taxation.

Amendments to the Prevention of Money Laundering Act (PMLA), 2002, would be carried out to include offence of tax evasion as a scheduled offence under the Act.

Referring to the new legislation, Jaitley had yesterday said: "we are going to make sure that there is no scope for misuse, but at the same time there is a deterrent for those who stock money abroad".

The proposal to come out with a new law on the black money was announced by Jaitley in his Budget speech last month.

The issue of black money, especially alleged stashing of illicit wealth abroad in places like Switzerland, has been a matter of huge political debate for a long time.

The government has also been under pressure to act on the issue of black money, as BJP had mounted a huge campaign during the Lok Sabha polls last year with an assurance to check this menace.