A new legislation is passed in the parliament aimed at curbing and punishing those who hold illegal foreign Income and assets abroad known as the black money bill.
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, which is now an act penalizes the concealment of foreign income and provides for criminal liability for attempting to evade tax on the foreign incomes of Indians.
In case of non-filing of returns or non-disclosure of income or assets in the return, the penalty provided is Rs 10 lakh (or Rs 1 million).
Second and subsequent offences will be punishable with rigorous imprisonment of between three and 10 years with a fine of up to Rs 1 crore (Rs 10 million).
The compliance window will provide an opportunity to people to come clean by declaring overseas assets and paying tax and penalty totaling 60 per cent.
In addition to penalties, the Act also provides for prosecution for tax evasion and non-filing of returns.
Willful evasion of taxes in relation to foreign income or assets is punishable with rigorous imprisonment of between three years and 10 years along with a penalty equal to three times the amount of tax evaded or 90 per cent of the undisclosed income or the value of the asset.
Non-filing of returns with respect to foreign income or assets or bank accounts is punishable with rigorous imprisonment of between six months and seven years.
These provisions will also be applicable to the beneficial owners of these illegal foreign assets. A beneficial owner is the person who is the de facto owner of such income or asset and enjoys the benefits derived out of it.
Interestingly, the law also makes inducement or abatement of another person to file a false return or make a false statement or declaration under the Act a punishable offence. Such a provision had hitherto been absent in the country’s laws dealing with tax evasion or money laundering.
Theoretically, this provision in the law can hold banks, chartered accountants, legal advisors and financial institutions liable, together with the holders of black money.
The black money bill and the Benami bill are indicative of the government’s intention to address the issue of black money holistically
Explain why new law may not be able to bring back money illegally stashed by Indians in foreign banks?
How efficacious is the new black money law which is aimed at curbing and punishing those who hold illegal foreign Income and assets abroad? Briefly Discuss its Pros and Cons.