A bill to combat the black money menace in foreign shores was on Friday tabled in Lok Sabha, carrying stringent provisions including jail term for those who fail to declare foreign income and assets, or participate in such acts.
Bringing back black money stashed in foreign accounts was one of the flagship poll-promises of the Narendra Modi-led BJP’s Lok Sabha election campaign.
After it gets Parliamentary nod, all income and assets from offshore sources would be covered by the new legislation, and will no longer come under the Income-Tax Act.
The government will also introduce a comprehensive new Benami Transactions (Prohibition) Bill in the current session of parliament after the month-long recess to crack down on the domestic parallel economy.
The Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015 introduced on Friday says: “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.”
“No Indian can hold unauthorised and undisclosed assets or income outside this country. Those who hold it will have to pay taxes, disclose asset and bring the money back to India. If they don’t, they are going to be severely prosecuted under this law. I hope it comes up for discussion in the second half of the session,” finance minister Arun Jaitley said.
The bill provides for rigorous imprisonment besides fine for wilful attempt to evade tax in relation to a foreign income or asset, failure to file returns on such income or assets or abetting such acts (for instance, by banks).
The bill also seeks to provide safeguards for those holding foreign accounts with minor balances (less than Rs 5 lakh).
There will be no penalty or prosecution if such small accounts inadvertently go unreported, the bill says. It also makes it mandatory to issue notices and grant the assessee opportunity of being heard and right of appeal to the income tax appellate authorities and the courts.
The bill vests the tax authorities with powers of discovery and inspection, issue of summonses, enforcement of attendance, production of evidence and impounding of books of account and documents. The Prevention of Money Laundering Act will also be suitably amended to cover tax evasion.