Forms to be separate from the normal income tax filing, other details on submission in a few days; ambiguity continues on protection from money laundering provisions
Forms for a three-month compliance window under the Undisclosed Foreign Income and Assets and Imposition of Tax Act, the ‘black money’ legislation, will be separate from the normal income tax forms and may also be filed online, though they will initially go only to centres in Delhi.
The government notified the compliance window under the Act on Wednesday, in force till September 30.
It allows those with undisclosed income and assets abroad to declare these without prosecution. The final date for paying taxes and penalties, 30 per cent each, under the window is December 31.
“To begin with, we are starting with Delhi. If during the course of the window, we see there are numerous cases of previously undeclared assets being disclosed at other cities or centres, we will open centres in other cities as well,” a senior official said.
These and other details of the compliance window will be there in an official notification, yet to be issued. Officials say this would be in a couple of days.
The window will come ahead of the imposition of the stringent Act from assessment year 2016-17.
Upon fulfilling the conditions of the compliance window, a person or entity “shall not be prosecuted under the Act and the declaration made by him will not be used as evidence against him under the Wealth Tax Act, the Foreign Exchange Management Act, the Companies Act or the Customs Act. Wealth tax shall not be payable on any asset so disclosed,” the Act states.
After the compliance window is over and the Act is enforced from the next assessment year, those with undeclared assets and income abroad will have to pay a tax of 30 per cent and a penalty of 90 per cent. They will also face prosecution.
This means violators will not only lose their assets but also pay an amount more than the value of the asset, and face jail terms.
Wilful attempts to evade tax in relation to foreign income will be punished with rigorous imprisonment of three to 10 years. Failure to furnish a return of income from foreign assets, as well as to disclose the assets, will be punishable with rigorous imprisonment of six months to seven years.
However there are concerns that a person paying taxes and penalties on previously undeclared assets could yet be prosecuted under the Prevention of Money Laundering Act.
This is because the black money law does not say a fresh declaration of undisclosed money or properties abroad will not be used as evidence for prosecution under PMLA. As noted above, it guarantees immunity only from four stated laws.
According to tax experts and analysts, unless the Central Board of Direct Taxes clarifies its stance on PMLA, people with unaccounted wealth and assets abroad might not declare their assets, for fear of prosecution later.
Experts say the confusion is made worse with the Act proposing to amend PMLA to include tax evasion in relation to undisclosed foreign income and assets under the proposed legislation as a scheduled offence.
Senior officials have sought to dispel the concern, saying the four laws cited in the Act are enough to safeguard against any later prosecution under other laws.
They say PMLA can only be invoked if there is a predicated offence committed with regard to the money.
The black money law was passed by the Parliament in its budget session. It received Presidential assent and became law on May 26.
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