The government is likely to table a bill that makes concealing foreign assets and income from tax authorities a crime punishable with a 10-year jail term in Lok Sabha on Friday - the last day of the first leg of the Budget session of Parliament.
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill cleared by the cabinet, with a view to put in place a legal framework to unearth black money and illicit assets stashed abroad, also enables enforcement agencies to attach and confiscate these assets under the Prevention of Money Laundering Act.
Under the provisions of the new bill, the offence will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission for resolution of disputes. There will also be a penalty at the rate of 300% of taxes on the concealed income and assets.
Government sources said the proposed bill empowers the government to notify a window when people with undisclosed foreign funds can come clean. The duration of this window — along with the tax rate and penalty — will be notified once Parliament clears the bill.
It is expected that the window will be open for a few months. Once this window is shut, the government intends to go all out.
The assesses will be given a few months time to declare their overseas assets, the official said, adding the bill would also provide for a rigorous jail term of 10 years for concealment of such income.
The new bill — first announced by finance minister Arun Jaitley in his budget speech — requires people to declare foreign assets and income, including the date of opening their foreign bank accounts. If people with assets abroad skip filing their returns or provide inadequate information, they will be liable to imprisonment for 7 years.
Income from any undisclosed foreign asset would be taxed at the highest slab.
The bill also provides for prosecution and penalty of individuals, banks or institutions for abetment if they help anyone create or hide foreign assets.
Government sources added that the bill would be complemented by other legislation and measures, including a new Benami Transactions (Prohibition) Bill that is in the process of being finalised.
Both legislations are to be introduced in the ongoing budget session. An official said the black money bill was sent to the President for approval before its introduction.
He also pointed to the cabinet approval to signing an agreement with the US for implementation of its Foreign Account Compliance Act, to facilitate flow of information on cases of tax avoidance through overseas entities.
The first leg will end on Friday unless extended. After being tabled, the bill could be referred to the Parliamentary Committee for scrutiny before being taken up for passage.
In addition, a decision was taken at the meeting to join the Multilateral Competent Authority Agreement on Automatic Exchange of Information — which Prime Minister Narendra Modi had strongly supported during last year’s G20 summit in Australia, saying it would be instrumental in getting information about unaccounted money that was being hoarded and enable its eventual repatriation.
The government has been under pressure to act on the issue of black money stashed abroad as the BJP and Modi had mounted a huge campaign during the Lok Sabha election last year with promise to quickly repatriate such illegal wealth.
(With PTI inputs)