The Hon'ble Finance Minister in his
budget speech for 2015-16 had proposed introduction of Black Money Bill in the
Parliament. The Bill was passed by the Parliament in its budget session. The
Bill received the assent of the President on May 26, 2015 and it became the
law. It is to be called as "The Black Money (Undisclosed Foreign Income
and Assets) and Imposition of Tax Act, 2015" ("the Black Money
Act"). It has been clarified by the Government that such Black Money Act
would be applicable from July 1, 2015.
How to come clean under Compliance
window
Make declaration of foreign asset
or income on or before Sept 30, 2015.
Person making declaration has to
pay penalty and taxes on or before Dec 31, 2015.
When Compliance window is not
available?
If any information about the
foreign asset or income has been received by the Govt. on or before June 30,
2015.
Benefits of Compliance window
Pay reduced penalty of 100% of
tax.
Get immunity from prosecution.
Contents disclosed in the
declaration are not admissible as evidence against the declarant in any
penalty/ prosecution proceedings under the Income-tax Act, FEMA, the
Companies Act or the Customs Act.
|
The Black Money Act provides for
30% tax on the value of undisclosed foreign income or assets with a penalty
equivalent to three times of tax so computed. It further provides for
prosecution of up to 10 years in case of willful attempt to evade tax on
foreign income or assets held outside India.
The Black Money Act provides for
compliance window, i.e., one-time opportunity for taxpayers to voluntarily
disclose the undisclosed foreign income or assets. Any person who opts for
this compliance window shall be liable to pay reduced penalty of 100% of tax
and would also get immunity from prosecution.
Recently, the Government has
notified Rules for Black Money law and issued a circular explaining substance
of provisions of compliance window.
|
Declaration under compliance window
can be made during the period from July 1, 2015 to September 30, 2015. However,
a person will not be eligible to obtain benefit of compliance window if any
information regarding undisclosed foreign asset or income has been received by
competent authority on or before June 30, 2015. Thus, taxpayers on HSBC list
might be denied benefit of compliance window.
Provisions relating to compliance
window in questions and answer format have been given in following paras.
Q. How to avail benefit of
compliance window?
A declaration of undisclosed foreign
asset or income can be made by a person who is resident and ordinary resident
in India under the income-tax Act. Declaration can be made in 'Form 6' on or
before September 30, 2015.
Any person availing of benefit of
compliance window is required to pay taxes at the rate of 30% of value of
undisclosed asset and a further penalty of 100% of tax. Such taxes and penalty
are required to be paid by declarant on or before December 31, 2015.
Q. Where to file declaration?
The declaration may be filed with
the Commissioner of Income-tax, Delhi. The declaration may also be filed on the
e-filing website of the Income-tax department using the digital signature of
the declarant.
Q. Who are authorized to sign the
declaration?
S. No.
|
Status of declarant
|
Declaration to be signed by
|
1.
|
Individual
|
- Individual, or
- Any person authorized by
individual (if individual is absent from India), or
- Guardian or any other person
competent to act on his behalf (if individual is mentally incapacitated).
|
2.
|
HUF
|
- Karta, or
- Any other adult member of Karta
(If Karta is absent from India or is mentally incapacitated from attending to
his affairs)
|
3.
|
Company
|
- Managing Director, or
- Any director (if for any
unavoidable reason the managing director is not able to sign or there is no
managing director)
|
4.
|
Firm
|
- Managing partner, or
- Any partner not being a minor
(If for any unavoidable reason the managing partner is not able to sign the
declaration, or where there is no managing partner)
|
5.
|
Any other association
|
- Any member of the association or
the principal officer.
|
6.
|
Any other person
|
- That person or by some other
person competent to act on his behalf.
|
Q. Who are not eligible to make
declaration?
Following persons shall not be
eligible to make declaration under the Black Money Act:
(1) A person against whom proceedings for prosecution are
pending in respect of offences relating to public servants under Chapter IX of
the Act;
(2) A person against whom proceedings for prosecutions are
pending in respect of offences against property under the Indian Penal Code;
(3) A person against whom proceedings in respect of unlawful
activities are pending;
(4) A person against whom proceedings for Prevention of
Corruption Act are pending.
Q. Circumstances where declaration
shall be invalid
In following situations, a
declaration shall be void and shall be deemed to have never been made:
(1) If the declarant fails to pay the entire amount of tax
and penalty on or before December 31, 2015.
(2) Where the declaration has been made by misrepresentation
or suppression of facts or information.
Where the declaration is held to be
void for any of aforesaid reasons, then declarant would be liable to pay
penalty three times of tax and will also be liable for prosecution.
Q. Circumstances where a declaration
cannot be made
No declaration under the compliance
window can be made in respect of any undisclosed foreign assets which have been
acquired from income chargeable to tax under the income-tax Act for assessment
year 2015-16 or any other earlier assessment year in the following cases:
(1) If any information regarding undisclosed foreign
asset or income has been received by the Government on or before June 30, 2015.
(2) Where a notice under section 142 or Section 143(2) or
section 148 or section 153A or section 153C of the Income-tax Act has been
received in respect of such assessment year and the proceeding is pending
before the Assessing Officer. (The person will not be eligible under the
compliance window if any of the above notices has been served on or before June
30, 2015);
(3) Where a search has been conducted or requisition has
been made or a survey has been carried out under the Income-tax Act (If time
for issuance of notice under Sections 143(2), 153A and 153C has not expired.)
Q What will be the effect of valid
declaration?
Following would be the effects of
valid declaration:
(1) The amount disclosed under this scheme shall not be
included in the total income of the declarant under the Income-tax Act for any
assessment year;
(2) The contents disclosed in 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.
(3) The value of assets declared in the declaration shall
not be chargeable to wealth tax for any assessment year.
(4) Declaration of undisclosed foreign asset will not affect
the finality of completed assessments. However, the declarant will not be
entitled to re-assessment for 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 undisclosed asset located outside India now
declared through compliance window or any tax paid thereon.