Brief Analysis of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

Basis of charge

Undisclosed asset outside India is defined to mean asset (including financial interest in any entity) located outside India, held by assesee in his own name or in respect of which he is beneficial owner, and he has no or unsatisfactory explanation about the source of information.

Rate of tax and relevant provisions

Chargeable to tax @ 30% (without any deduction otherwise allowed under IT Act) are income from such undisclosed asset (which is not included in return or return itself if not filed) and FMV of such assets as determined in manner prescribed, excluding any adjustment of foreign income is made u/s 29, 43C, 57, 59, 92C of IT Act and vice versa income taxed under this Act will not form part of income under IT Act

In case the source of acquiring such undisclosed assets were already offered to income tax or income from undisclosed assets already has suffered income tax the same will not be taxed again under this Act.

Where undisclosed asset outside India is immovable property and source of funding partially offered to tax then proportionate basis income from such property is taxed under this Act. If FMV of undisclosed immovable property is, say Rs 100 in the year when detected by AO and value was Rs 50 in the year of acquisition of which only Rs 20 was offered to tax then tax calculation will be Rs 100 less (100*20/50)= Rs 60 @ 30%-= Rs 18 as tax.

Assessment and period of limitation

Proceeding before tax authority shall be deemed to be judicial proceeding u/s 193 & 228 of IPC and tax authority deemed to be civil court under CPC

Based upon information from income tax officer, AO under this Act issue notice of assessment and seek required information documents and pass an order in writing assessing income and undisclosed foreign assets within 2 years from the end of FY in which notice issued

In computing period of limitation, time taken in reopening the proceedings, period stayed by order or injunction of any court and where after exclusion if the remaining time is less than 60 days for assessment the remaining period shall be extended to 60 days

Union Budget 2019-20 redefines the term “assessee”, clarifying that the residential status of the assessee, in the previous year in which the income is earned or the asset is acquired, shall be the determinative factor for charging under the Act.

Rectification order

Rectification of mistake apparent from the record can be done in 4 years from end of FY in which original order was passed and such amendment can be done by tax authority on its own or based application of assessee or AO

However, no such amendment power with the tax authority where the order has been passed in appeal on such matter.

Who is liable?

Though the provision of chapter XV of IT Act, liability in special cases, stand applicable to this Act however there is no bar to directly proceed against the beneficial person himself

Thank you for the patient reading. Hope this document to be relevant. For feedback or comments, may please write to madan.sanjiv@gmail.com

{Disclaimer: This document had been written to provide Income Tax provisions in simple manner. The author shall not be responsible for any of the decision made based on the contents of this document}

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