Government of India
Ministry of Finance
Department of Revenue
Central Board of
North Block, New
Dated: 20th March,
INTRODUCTION OF THE UNDISCLOSED FOREIGN
INCOME AND ASSETS (IMPOSITION OF TAX) BILL, 2015
The Finance Minister, in his budget speech, while
acknowledging the limitations under the existing law, had conveyed the
considered decision of the Government to enact a comprehensive new law on black
money to specifically deal with black money stashed away abroad. He also
promised to introduce the new Bill in the current Session of the Parliament.
2. In order to fulfil
the commitment made by the Government to the people of India through the
Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill,
2015 has been introduced in the Parliament on 20.03.2015. The Bill provides for
separate taxation of any undisclosed income in relation to foreign income and
assets. Such income will henceforth not be taxed under the Income-tax Act but
under the stringent provisions of the proposed new legislation.
3. The salient features of the Undisclosed Foreign Income and
Assets (Imposition of Tax) Bill, 2015 are as under:-
Scope – The Act will apply to all persons resident in India.
Provisions of the Act will apply to both undisclosed foreign income and assets
(including financial interest in any entity).
Rate of tax – Undisclosed foreign income or assets shall be
taxed at the flat rate of 30 percent. No exemption or deduction or set off of
any carried forward losses which may be admissible under the existing
Income-tax Act, 1961, shall be allowed.
Penalties – Violation
of the provisions of the proposed new legislation will entail stringent
4. The penalty for non-disclosure of income or an asset
located outside India will be equal to three times the amount of tax payable
thereon, i.e., 90 percent of the undisclosed income or the value of the
undisclosed asset. This is in addition to tax payable at 30%.
5. Failure to furnish return in respect of foreign income or
assets shall attract a penalty of Rs.10 lakh. The same amount of penalty is
prescribed for cases where although the assessee has filed a return of income,
but he has not disclosed the foreign income and asset or has furnished
inaccurate particulars of the same.
Prosecutions – The Bill proposes enhanced punishment for
various types of violations.
6. The punishment for willful attempt to evade tax in
relation to a foreign income or an asset located outside India will be rigorous
imprisonment from three years to ten years. In addition, it will also entail a
7. Failure to furnish a return in respect of foreign assets
and bank accounts or income will be punishable with rigorous imprisonment for a
term of six months to seven years. The same term of punishment is prescribed
for cases where although the assessee has filed a return of income, but has not
disclosed the foreign asset or has furnished inaccurate particulars of the
The above provisions will also apply to beneficial owners or
beneficiaries of such illegal foreign assets.
8. Abetment or inducement of another person to make a false
return or a false account or statement or declaration under the Act will be
punishable with rigorous imprisonment from six months to seven years. This
provision will also apply to banks and financial institutions aiding in
concealment of foreign income or assets of resident Indians or falsification of
Safeguards – The principles of natural justice and due
process of law have been embedded in the Act by laying down the requirement of
mandatory issue of notices to the person against whom proceedings are being
initiated, grant of opportunity of being heard, necessity of taking the
evidence produced by him into account, recording of reasons, passing of orders
in writing, limitation of time for various actions of the tax authority, etc.
Further, the right of appeal has been protected by providing for appeals to the
Income-tax Appellate Tribunal, and to the jurisdictional High Court and the
Supreme Court on substantial questions of law.
9. To protect persons holding foreign accounts with minor
balances which may not have been reported out of oversight or ignorance, it has
been provided that failure to report bank accounts with a maximum balance of
upto Rs.5 lakh at any time during the year will not entail penalty or
10. Other safeguards
and internal control mechanisms will be prescribed in the Rules.
One time compliance opportunity – The Bill also provides a
one time compliance opportunity for a limited period to persons who have any
undisclosed foreign assets which have hitherto not been disclosed for the
purposes of Income-tax. Such persons may file a declaration before the
specified tax authority within a specified period, followed by payment of tax
at the rate of 30 percent and an equal amount by way of penalty. Such persons
will not be prosecuted under the stringent provisions of the new Act. It is to
be noted that this is not an amnesty scheme as no immunity from penalty is
being offered. It is merely an opportunity for persons to come clean and become
compliant before the stringent provisions of the new Act come into force.
Amendment of PMLA –
The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002
to include offence of tax evasion under the proposed legislation as a scheduled
offence under PMLA.
11. Thus, in keeping
with the commitment of the government for focussed action on black money front,
an unprecedented and multi-pronged attack has been launched to root out the
menace of black money. The Government is confident that this new law will act
as a strong deterrent and curb the menace of black money stashed abroad by
Commissioner of Income Tax
(Media & Technical Co-ordination)
Central Board of Direct Taxes