As on March 18, 58 jurisdictions (including India) have committed to share information under AEOI by 2017. A further 36 jurisdictions have committed to share by 2018, including jurisdictions which have beneficial tax regime.
Government on Monday warned of serious consequences such as stringent penalties and a jail term for non-disclosure of overseas income and assets, saying that from 2017 tax authorities will start getting access to such information from foreign countries.
In 'Frequently Asked Questions (FAQs)' on the new Black Money Act, the Finance Ministry has said that if undisclosed assets are unearthed by the tax department at a future date, then 120% tax and penalty would be levied on its fair market value on that date, besides a jail term.
"India is expected to start receiving information through Automatic Exchange of Information (AEOI) route under FATCA from USA later in the year 2015. Further, under the multilateral agreement India will start receiving information from other countries under AEOI route from 2017 onwards," it said.
As on March 18, 58 jurisdictions (including India) have committed to share information under AEOI by 2017. A further 36 jurisdictions have committed to share by 2018, including jurisdictions which have beneficial tax regime, it said.
"The multilateral agreement is expected to cover all the countries in the near future. The information under the AEOI will include information of controlling persons (beneficial owners) of the asset. The possibility of discovery of an undisclosed asset may arise at any time in the future," it said.
The Finance Ministry said that where any asset has been acquired prior to the commencement of the Act and no declaration has been made, then such asset shall be deemed to have been acquired in the year in which it comes to the notice of the Assessing Officer and the provisions of the Act shall apply accordingly.
Citing example, the FAQ said information of an immovable property can be unearthed by the tax department if any utility bills/property tax or even gardener's or caretaker's salary has been paid through an existing or closed bank account.
"Therefore, if any information of an undisclosed foreign asset acquired earlier, say in the year 1975, for US $100,000 comes to the notice of an Assessing Officer later, say in the year 2020, when its value becomes, say, US $5 Million, the liability under the Act amounting to 120% of the fair market value of the asset on the valuation date may arise in the year 2020, besides prosecution and other consequences.
"In this case if the valuation date is in the year 2020 the amount of tax and penalty under the Act will be US $6 million," the FAQ said.
Under the black money Act, the government has provided for a one time 90-day compliance window for disclosure of undeclared foreign assets. The window closes on September 30.
The disclosure will attract a total of 60% tax and penalty, which has to be paid by December 31, 2015.
However, unaccounted assets and income unearthed by the tax department would attract 120% tax and penalty, besides punitive action, once the window is closed.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}