Ministry of Finance (MoF) to issue more FAQs on black money law

The government will issue another set of clarifications in the form of ˜Frequently Asked Questions (FAQs)™ on the Undisclosed Foreign Income and Assets Act, popularly known as the Black Money Act.

There will be a next set of FAQs and further clarifications on a number of queries being raised.

The ministry had released 32 FAQs on the new law, compliance window and penalties. There is a 120 per cent penalty, plus taxes, and an imprisonment term, for undeclared wealth or assets abroad after the three-month compliance window ends. During the window, the penalty and taxes combined will be 60 per cent of the value of assets declared, with no imprisonment term, and immunity from certain laws.

The Act comes into effect from April 1, 2016.

Here are some salient features about the Black Money Bill:

1. Tax on all foreign income will have to be paid at the flat rate of 30 per cent without any exemption, deduction, set off or carry forward losses that the Income Tax Act permits.
2. Enhanced punishment of jail for 3-10 years for wilful evasion of tax on foreign income 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.
3. There is a limited compliance window offer. Offenders would have to pay tax at the rate of 30 per cent but concessional penalty would be equal to the tax amount.
4. Failure to file returns of foreign income or assets will attract a penalty of Rs. 10 lakh.
5. Second and subsequent offence will be punishable with rigorous imprisonment of 3-10 years with a fine of up to Rs. 1 crore.
6. Undisclosed holdings of less than Rs. 5 lakh at any time during a year not reported out of oversight or ignorance will not entail penalty or prosecution.
7. The Bill empowers the Centre to enter into agreements with other countries for the exchange of information, recovery of tax and avoidance of double taxation.
8. To include tax evasion under the proposed legislation as a scheduled offence the Bill proposes to amend the Prevention of Money Laundering Act, 2002.
9. The right to appeal will be to the Income Tax Appellate Tribunal and to jurisdictional High Courts and the Supreme Court on substantial questions of law.
10. The tax authorities will have powers of discovery and inspection, issue of summonses, enforcement of attendance, production of evidence and impounding of account books and documents.