Blackmoney Bill in Lok Sabha provides for 10 year jail, 90% tax

Blackmoney stashed abroad will entail a 10 year rigorous imprisonment and a whopping 90% tax under the proposed stringent law that provides for a limited window of opportunity to offenders to disclose illicit wealth and escape prosecution.

Acting on his Budget promise, Finance Minister Arun Jaitley introduced in the Lok Sabha today an 88-clause Bill that seeks to unearth blackmoney and assets stashed abroad, an issue the BJP and Prime Minister Narendra Modi had campaigned against in the Lok Sabha elections.

'The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015', that is proposed to come into effect from April 1, 2016, provides for taxation at the flat rate of 30 per cent without any exemption, deduction, set off or carry forward losses permissible under the Income Tax Act.

The Bill provides for a separate taxation of undisclosed income abroad which will be no longer be taxed under the Income Tax Act.

In the statement of objects and reasons appended to the Bill, Jaitley says a limited window is provided to offenders to file a declaration before a specified tax authority within a period, followed by payment of tax at 30 per cent and an equal amount of penalty.

"Upon fulfilling these conditions, a person shall now be prosecuted under the Bill and declaration made by him will not be used as evidence against him in the Wealth Tax, Foreign Exchange Management Tax, the Companies Act or the Customs Act," it said.

"Wealth Tax shall not be payable on any asset so disclosed. It is merely an opportunity for persons to become tax compliant before the stringent provisions of the new legislation comes into force," Jaitley said.

The Bill, however, protects persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, from criminal consequences.

"Evasion of tax robs the nation of critical resources necessary to undertake programmes for social inclusion and economic development. It also puts a disproportionate burden on the honest tax payers as they have to bear the brunt of higher taxes to make up for the revenue leakage caused by evasion," it said.

Under the measure, the tax authorities have been vested with powers of discovery and inspection, issue of summonses, enforcement of attendance, production of evidence and impounding of books of account and documents.

It also provides for adequate safeguards, making it mandatory to issue notices and grant opportunity to the assessee of being heard.

Appeal to the ITAT, High Courts and Supreme Court has also been provided to safeguard the interest of the assessee.

As per the Bill, the Government have been empowered to enter into agreements with other countries or jurisdictions for exchange of information, recovery of tax and avoidance of double taxation.

Amendments to the Prevention of Money Laundering Act (PMLA), 2002, would be carried out to include offence of tax evasion as a scheduled offence under the Act.

Referring to the new legislation, Jaitley had yesterday said: "we are going to make sure that there is no scope for misuse, but at the same time there is a deterrent for those who stock money abroad".

The proposal to come out with a new law on the black money was announced by Jaitley in his Budget speech last month.

The issue of black money, especially alleged stashing of illicit wealth abroad in places like Switzerland, has been a matter of huge political debate for a long time.

The government has also been under pressure to act on the issue of black money, as BJP had mounted a huge campaign during the Lok Sabha polls last year with an assurance to check this menace.