The Lok Sabha Monday passed a tough bill imposing heavy penalties for stashing black money abroad, a move described as “draconian, very harsh and retrograde” by the Opposition.
Introduced in the Lok Sabha by finance minister Arun Jaitley, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, seeks to impose a 120% of tax and penalty on undisclosed foreign assets and income besides a jail term of up to 10 years.
Before the new law kicks in, there would be a short compliance window for persons with undisclosed income abroad to come clean by paying 30% tax and 30% penalty, the minister said.
A separate bill would soon be brought in to tackle the menace at home, he said.
The bill was passed by voice vote with Opposition’s support as Jaitley dismissed apprehensions that innocent people would be harassed. He said the government didn’t intend to proceed against trivial violations but won’t let big fish escape.
As the legislation was categorised as a money bill, it could only be introduced in the Lok Sabha. The bill now goes go to the Rajya Sabha, which, however, has limited powers in its passage and will have to return it to the lower House within 14 days, with or without recommendations.
The Lok Sabha can either accept or reject the recommendations and if the Rajya Sabha does not return it, the bill would be deemed to have been passed by both the Houses.
Moving the bill, Jaitley rejected the Opposition’s demand to refer the bill to a standing committee for wider deliberations.
Initiating the debate, Congress member Deepender Singh Hooda said many taxpaying, law-abiding innocent residents and citizens of the country would face a “lot of hardships”.
The Congress leader from Haryana warned that the law would give “unbridled power” to tax officials to harass students studying abroad and NRIs.
Many Indians living abroad might give up their citizenship, as they would have to provide paper trail of assets and a slip could lead result in severe penalty and imprisonment.
The Congress, he said, was supporting the bill as it didn’t want to be accused of “standing between the people and `15 lakh”. He was referring to Prime Minister Narendra Modi’s campaign claim that if all the Indian money illegally stashed abroad was brought back, everybody would stand to gain `15 lakh.
Biju Janata Dal’s Bartuhari Mahtab said the proposed law was “very harsh and retrograde” and could be misused for “political vendetta”.
Ally Shiv Sena, too, urged caution. Its member Arvind Sawant said due care should be taken to see that the law didn’t turn “draconian”.
Though Congress member Shashi Tharoor backed the bill, he said there were four fatal flaws in the new legislation, as the government would not have access to information about the people who it intended to prosecute. “You can’t jail unknown people. There are no safeguards for protecting the innocent. It will end up creating more NRIs and drive away businesses….It is like recreating the inspector raj.”
On fears that innocent persons could get penalised, Jaitley said no action would be taken against people having `5 lakh or equivalent amount in their overseas accounts.