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The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015

What?

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The Bill will apply to Indian citizens and seeks to replace the Income Tax (IT) Act, 1961 for the taxation of foreign income. It penalizes the concealment of foreign income, and provides for criminal liability for attempting to evade tax in relation to foreign income.

Why?

A deterrent law should replace the existing law to snatch the “Black money” abroad; The government’s agenda.

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How?

Government will provide a compliance period where the Indian citizen can declare his/her assets abroad and pay tax rate at 30% and also the penalty of the same amount(30%).

After that period, if government finds any misconduct or nontaxable assent abroad, the tax of 30%, penalty of 90% and also criminal charges for the non-declaration of assets.

Penalty for offences:

Undisclosed foreign income/assets: The penalty for nondisclosure of foreign income or assets would be equal to three times the amount of tax payable, in addition to tax payable at 30%.

Failure to furnish returns: The penalty for not furnishing income tax returns in relation to foreign income or assets is a fine of Rs 10 lakh. This would not apply to an asset, with a value of five lakh rupees or less.

Undisclosed or inaccurate details of foreign assets: If a person who has filed tax returns does not disclose his foreign income, or submits inaccurate details of the same, he has to pay a fine of Rs 10 lakh. This would not apply to an asset, with a value of five lakh rupees or less.

Second time defaulter: Any person, who continues to default in paying tax that is due, would be liable to pay an amount equal to the amount of tax arrears.

Other defaults: If a person fails to abide by the tax authority in (i) answering questions, (ii) signing off on a statement, (iii) attending or producing relevant documents, he is to pay a fine between Rs 50,000 to two lakh rupees.

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Prosecution for certain offences:

Willful attempt to evade tax: The punishment would be rigorous imprisonment from three to 10 years, and a fine.

Willful attempt to evade payment of tax: The punishment would be rigorous imprisonment from three months to three years, and a fine.

Failure to furnish returns, or non disclosure of foreign assets in returns: The punishment is rigorous imprisonment of six months to seven years, and fine.

Punishment for abetment: The punishment is rigorous imprisonment of six months to seven years, and fine.

Liability of company: For any offence under this Act, every person responsible to the company is to be liable for punishment. His liability is absolved if he proves that the offence was committed without his knowledge.

 

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