Two new laws to curb black money in India and abroad

New Delhi(web team): Battling with the black money crisis, the government has proposed to bring in two stringent laws to check both foreign and domestic black money, this time with strict penal provisions.

“We have taken a considered decision to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad, I propose to introduce a bill in the current session of the Parliament,” finance minister Arun Jaitley said in his Budget speech.

Under the proposed law, concealment of income and assets and evasion of tax in relation to foreign assets will be prosecutable with rigorous imprisonment of up to 10 years. Further, the offence will be made non-compoundable and the offenders will not be permitted to approach the Settlement Commission. Moreover, tax evader has to face penalty at the rate of 300% of tax on concealment of income and assets.

With this new proposed law, non-resident Indians (NRI) need to be more cautious as inadequate disclosure of foreign assets or non- filing of return will be liable for prosecution with punishment of rigorous imprisonment up to 7 years. There will be no provision of tax exemptions and deductions with undisclosed foreign assets. Even if the income is not taxable, the beneficial owner will be mandatory required to file tax returns.

With the significant rise of black money through banking channels, assesses will be mandated to give details of date of opening of foreign accounts in their return of income.

” With this proposed amendment, it will assist the tax authorities to ensure that the foreign bank accounts have been disclosed from inception which was difficult to trace earlier without the date of opening bank account,” said Mitil Choksi, an international tax expert.

To enable the administration of new act on black money the Prevention of Money Laundering Act, 2002 (PMLA) and Foreign Exchange of Management Act, 1999 (FEMA) to be amended.

The amends in PMLA will enable the enforcement agencies to attach and confiscate unaccounted assets held abroad and launch prosecution against persons indulging in laundering of black money. This also enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.

Similarly, FEMA is also being amended to the effect that if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of the provisions of this Act, then action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India. These contraventions are also being made liable for levy of penalty and prosecution with punishment of imprisonment up to five years.

Also, the government has proposed Benami Transactions (Prohibition) Bill to curb domestic black money, especially in property deals.
“To curb domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current session of the Parliament. This law will enable confiscation of benami property, especially in real estate,” said Arun Jaitley.

So in a nutshell, quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh and there will be prohibition on acceptance or payment of an advance of Rs 20,000 or more in cash for purchase of any immovable property.
“We will rationalise and remove exemptions to eliminate tax disputes,” Jaitley said. He expects the direct tax collection to be at Rs 14.49 lakh crore in FY16.