Q.1 What is the Aim and Object of Black Money Act ?
Ans. Aim is to tax undisclosed foreign income and foreign asset acquired from such undisclosed foreign income and to punish the person indulging in illegitimate means of generating money and causing loss to the revenue.
Object is to prevent such illegitimate income and assets kept outside the country from being utilized in way which are detrimental to Indian social ,economic and strategic interest and its national security.
Q.2 From which year black money act , 2015 will be applicable?
Ans. As the act came in force on 1-7-2015, the undisclosed foreign income for the period 1-7-2015 to 31-03-2016 will be taxed under the black money act, 2015 as undisclosed income of assessment year 2016-2017. However the undisclosed foreign income for first three month of previous year 2015-2016 ie 1-4-2015 to 30-6-2015 will be taxed under Income tax Act 1961.
Q. 3 TO WHOM IT IS APPLICABLE?
Ans. As per section 2(2) of the black money act it is applicable to the person being a resident other then not ordinary resident in India within the meaning of clause (6) of sec 6 of Income Tax Act, 1961
As per amendment in finance act 2019 with retrospective effect from 1.7.2015 if a person is not ordinary resident but was a resident under income tax act in the year in which such undisclosed foreign income relate or undisclosed asset was acquired then such person will be falling under the definition of assessee under black money act.
The purpose of this amendment to make the black money act more effective, and to expand the scope and coverage of the Act to include the taxpayer who can take the shed of the earlier provisions which were not specific..
Q .4 How to charge tax under black money act ?
Ans. As per sec 3(1) it shall be charged on every assessee for every assessment year commencing on or after the 1st day of April 2016 subject to the provisions of this act, A tax in respect of his total undisclosed foreign income and assets of the previous year at the rate of thirty percent of such undisclosed income and assets .
Provided that an undisclosed assets located outside India shall be charged to tax on its value in the previous year in which such asset come to the notice of the assessing officer.
No education Cess ,Secondary and higher education Cess are levied on it.
Q. 5 Will assesee get deduction in respect of expenditure incurred to earn such foreign income or set off any loss will be allowed under black money act?
Ans. Section 5 deal with the computation of total undisclosed foreign income and foreign assets. Therefore in computing the total undisclosed foreign income and assets of the assessee, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under black money act.
Q. 6 If foreign asset not disclosed in schedule FA of income tax return then assesee is liable under black money act?
Ans. Asset is reported or not in schedule FA of ITR is irrelevant. Source of investment is relevant If source of investment is fully explanatory then it is not an undisclosed foreign asset even it has not been reported in schedule FA of ITR. If sources are not fully explained, then it is undisclosed foreign asset even if reported in Schedule FA of ITR. Therefore, if source of investment is fully explanatory then assessee is not liable under black money act.
Q.7 If Assesee having one or more foreign bank account having an aggregate balance less then five lacs is liable for penality under black money act ?
Ans. If value of all bank account are less then 5Lakhs then no penalty will be levied under black money act. but the important point is value of bank account is calculated by adding all the deposits made in account with the bank since date of opening of account.
Q. 8 What are the major difference between black money act and income tax act 1961?
Ans.
| Black Money act 2015 | Income tax Act 1961 |
| Applicable to foreign undisclosed income From 1-7-2015 to 31-03-2016 and subsequent years. | Applicable to foreign undisclosed income relating to assessment year prior to assessment year 2016-2017 and foreign undisclosed income for the period 01-4-2015 to 30-06-2015 |
| Applicable to foreign undisclosed asset detected by AO on or after 01-07-2015 | Applicable to foreign undisclosed asset detected by A.O prior to 01-07-2015 |
| No time limit for issuing notice for reassessment | Time limit for taking action against foreign undisclosed income which escaped assessment -4 year/6 years as per sec 149 |
| No time limit for issuing notice for reassessment | Time limit for taking action against foreign undisclosed assets 16 year as per section 149 |
| Interest u/s 234A,234B,234C for late /non filling of ITR ,for deferment of advance tax applicable to undisclosed foreign income and not to undisclosed foreign asset | Interest u/s 234A,234B,234C for late /non filling of ITR ,for deferment of advance tax applicable to undisclosed foreign income and foreign asset |
| No credit for tax paid under this act under DTAA | Taxes paid under 1961 act eligible for credit under DTAA |
Q. 9 What are the penalty for non disclosure of income or an assets located outside India ?
Ans. The penalty for non disclosure of income or an assets located outside India will be equal to three time the amount of tax payable ie 90 percent of the undisclosed income or the value of the undisclosed assets This is in addition to tax payable at 30%
Q.10 What are the penalty and punishment under black money act ?
Ans.
| Penalty for failure to furnish return in relation to foreign income and assets | Penalty of rupees 10L |
| Penalty for failure to furnish in return of income an information or furnish inaccurate particular about an assets(including financial interest in any entity) located outside india | Penalty of rupee 10L |
| Punishment for failure to furnish return in relation to foreign income and assets | Rigorous imprisonment for a term which should not be less then 6 month but it may extend to seven years and with fines |
| Punishment for failure to furnish in return of income ,any information about an asset located outside India
|
Rigorous imprisonment for a term which should not be less then 6 month but it may extend to seven years and with fines |
| Punishment for willful attempt to evade tax
|
Punishment with rigorous imprisonment for a term which should not be less then three years but which may extend to ten years and with fine applicable to assesee |
This is our personal view that the provisions of the Black Money Act, 2015 are harsh on the assessee who were nonresident in past and now resident and holding some foreign assets or receiving any foreign income such as pension income but fail to disclose in income tax return due to which they can face serious litigation and harassment from income tax authority. In order to avoid future litigation they must take proper consultation from CA and made proper disclosures income tax returns.
Author Bio
Informative Article with complete Clarity.