Finance Minister Arun Jaitley leaves for Parliament to present the annual budget 2015-16 in Lok Sabha, from his office. PTI
Given that the Bharatiya Janata Party has been in the forefront of the agitation against black money, finance minister Arun Jaitley had to deliver on this count quickly, and he has tried to do exactly that in the Budget.
But the government will have to be extremely cautious in allowing the income tax department to take action under the new black money regime that he has proposed to put in place.
The income tax department is already burdened with arrears of Rs 6.75 lakh crore and black money steps could lead to excesses if not exercised judiciously.
“Recognising the limitations under the existing legislation, we have taken a considered decision to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad. To this end, I propose to introduce a Bill in the current Session of the Parliament,” Jaitley said in his budget speech.
The highlights of the new legislation are:
Concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with punishment of rigorous imprisonment up to 10 years – this offence will be made non-compoundable — the offenders will not be permitted to approach the Settlement Commission – and penalty for such concealment of income and assets at the rate of 300% of tax shall be levied.
Then, non-filing of return or filing of return with inadequate disclosure of foreign assets will be liable for prosecution with punishment of rigorous imprisonment up to 7 years and income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at 30% rate. Exemptions or deductions which may otherwise be applicable in such cases, will also not be allowed.
With this, beneficial owner or beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income and abettors of these offences, whether individuals, entities, banks or financial institutions, will be liable for prosecution and penalty.
Date of Opening of foreign account will be mandatorily required to be specified by the assessee in the return of income.
Concealment of income or evasion of tax in relation to a foreign asset will be made a predicate offence under the Prevention of Money-laundering Act, 2002 (PMLA) and the provision would enable the enforcement agencies to attach and confiscate unaccounted assets held abroad and launch prosecution against persons indulging in laundering of black money.
The definition of ‘proceeds of crime’ under PMLA is also being amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.
Further, the Foreign Exchange Management Act, 1999 (FEMA) will also be amended to ensure if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of the provisions of this Act, then action is taken for seizure and eventual confiscation of assets of equivalent value situated in India — these contraventions are also being made liable for levy of penalty and prosecution with punishment of imprisonment up to five years.
For curbing the domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current session of the Parliament.
Among other measures, the Finance Bill proposes to amend the Income-tax Act to prohibit acceptance or payment of an advance of Rs 20,000 or more in cash for purchase of immovable property.
Quoting of PAN is also being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh and the third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions. Provision is also being made to tackle splitting of reportable transactions.
The two boards, Central Board of Direct Taxes and the Central Board of Excise and Customs will co-ordinate and leverage technology to curb black money.