The government Tuesday cleared a new bill that makes concealing foreign assets and income from tax authorities a crime punishable with a 10-year jail term and 300% fine on the tax evaded.
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill cleared by cabinet also enables enforcement agencies to attach and confiscate these assets under the Prevention of Money Laundering Act.
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 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 seven 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 bill cleared by cabinet on Tuesday was being 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.
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.