Analysis of CBDT’s Explanatory Circular on Provisions of Black Money Act, 2015

Suraj R. Agrawal

Analysis of CBDT’s Explanatory Circular on Provisions of the Black Money Act, 2015 (Circular No. 12 of 2015 dated 02.07.2015)

Introduction:-

• THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015 (referred to here as ‘the Act’) as passed by the Parliament received the assent of the President on the 26th of May 2015.
• It levies tax on undisclosed assets held abroad by a person who is a resident in India at the rate of 30 percent of the value of such assets, provides for a penalty equal to 90 percent of the value of such asset, and also provides for rigorous imprisonment of three to ten years for wilful attempt to evade tax in relation to a undisclosed foreign income or asset.

Scope of compliance window:-

Undisclosed foreign assets of a person who is a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act.

Rate of tax and penalty:-

• Tax at the rate of 30 percent of the value of such undisclosed asset.
• Penalty at the rate of 100% of such tax (i.e., a further 30% of the value of the asset as on the date of commencement of the Act).

Time limits for declaration and making payment:-

The Central Government has notified 30th September, 2015 as the last date for making the declaration before the designated Principal Commissioner or Commissioner of Income Tax (PCIT/CIT) and 31st December, 2015 as the last date by which the tax and penalty shall be paid.

Form for declaration:-

• The form prescribed for this purpose is Form 6 which has been duly notified.
• The declaration may be filed with the Commissioner of Income-tax, Delhi.
• The declaration may also be filed online on the e-filing website of the Income Tax Department using the digital signature of the declarant.

Declaration not eligible in certain cases:-

• As per the provisions of section 71 of the Act no declaration under the compliance window can be made in respect of any undisclosed foreign asset which has been acquired from income chargeable to tax under the Income-tax Act for assessment year 2015-16.
• Notice under section 142 or section 143(2) or section 148 or section 153A or section 153C of the Income-tax Act has been issued in respect of such assessment year and the proceeding is pending before the Assessing Officer.(Notice has been served upon the person on or before 30th June 2015 i.e. before the date of commencement of this Act also not elgible)
• Search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act in a previous year and the time for issuance of a notice under section 143 (2) or section 153A or section 153C for the relevant assessment year has not expired.
• Any information has been received by the competent authority under an agreement entered into by the Central Government under section 90 or section 90A of the Income-tax Act in respect of such undisclosed asset.
• A person in respect of whom proceedings for prosecution of any offence punishable under Chapter IX (offences relating to public servants) or Chapter XVII (offences against property) of the Indian Penal Code or under the Unlawful Activities (Prevention) Act or the Prevention of Corruption Act are pending.

Circumstances where declaration shall be invalid:-

• If the declarant fails to pay the entire amount of tax and penalty within the specified date, i.e., 31.12.2015
• Where the declaration has been made by misrepresentation or suppression of facts or information.

Effect of valid declaration:-

• Asset declared shall not be included in the total income
• The contents of the declaration shall not be admissible in evidence against the declarant in any penalty or prosecution proceedings under the Income-tax Act, the Wealth Tax Act, the Foreign Exchange Management Act, the Companies Act or the Customs Act.
• Asset declared shall not be chargeable to Wealth Tax.
• The declarant will not be entitled to claim re-assessment of any earlier year or revision of any order or any benefit or set off or relief in any appeal or proceedings under the Act or under Income-tax Act in respect of declared undisclosed asset located outside India or any tax paid thereon.

(Author can be reached at  [email protected])

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