CA Chirag Gupta
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 deals with the problem of black money i.e. undisclosed foreign income & assets, 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.
Key Highlights of the Act
♠ Date of enforcement – 1st April, 2016.
♠ Applicable to – Every assessee.
♠ Meaning of assesse – a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, by whom tax in respect of undisclosed foreign income and assets, or any other sum of money, is payable under this Act and includes every person who is deemed to be an assessee in default under this Act.
♠ Meaning of undisclosed asset located outside India – an asset (including financial interest in any entity) located outside India which belongs to assessee or for which assessee is the beneficial owner and has no explanation about its source of investment in such asset or the explanation given by him is in the opinion of Assessing Officer (A.O) unsatisfactory.
♠ Meaning of foreign income – total amount of undisclosed income of an assessee from a source located outside India.
♠ Charge of tax – Tax at the rate of 30% on value of undisclosed income and asset.
- Note – Value of Undisclosed asset located outside India shall be the FAIR MARKET VALUE of asset in the previous year in which asset comes into the notice of A.O.
♠ What is the scope of total undisclosed foreign income and asset?
- The total undisclosed foreign income and asset of any previous year of an assessee shall include :-
- income from a source located outside India, which has not been disclosed in the return of income
- income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished; and
- value of an undisclosed asset located outside India.
♠ No expenditure, set off or carry forward loss shall be allowed against income.
♠ Let’s understand it with an Illustration :-
- A house property located outside India was acquired by an assessee in the previous year 20010-11 for fifty lakh rupees. Out of the investment of fifty lakh rupees, twenty lakh rupees was assessed to tax in the total income of the previous year 2010-11 and earlier years. Such undisclosed asset comes to the notice of the Assessing Officer in the year 2018-19. If the value of the asset in the year 2018-19 is one crore rupees, the amount chargeable to tax shall be A-B=C
A= Rs.1 crore, B= Rs. (100 x 20/50) lakh= Rs.40 lakh, C= Rs. (100-40) lakh=Rs.60 lakh.
♠ Penalty – In addition to tax, penalty at 3 times the amount of tax (i.e. 90% of amount of tax) shall be levied.
Further, if residents fails to furnish return of income u/s 139 of Income-tax Act or furnishes incorrect particulars, he shall be liable to penalty of Rs.10lakh, if –
- he has any asset/income outside India
- is beneficiary of any asset outside India
- has income from a source outside India
- Provided that this provision shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year.
♠ Prosecution –
- failure to furnish return of income or failure to furnish the particulars of any asset or income located outside India – rigorous imprisonment not less than 6 months but may extend to 7 years in addition to fine.
- wilful attempt to evade tax, penalty or interest by RNOR – rigorous imprisonment not less than 3 months but may extend to 3 years and fine on discretion of court.
- wilful attempt to evade tax, penalty or interest by RNOR – rigorous imprisonment not less than 3 years but may extend to 10 years in addition to fine.
♠ One time window (time period lapse now) – voluntary disclosure of undisclosed income or asset.
- Available to – every person
- Tax rate – 30% of the value of undisclosed asset plus penalty of 100% of such tax.
- Immunity from income tax, wealth tax, custom, FEMA and Companies Act.
- Last date for opting scheme – 30th September 2015.