Download The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015

Press Information Bureau
Government of India
Ministry of Finance
20-March-2015 15:54 IST

Highlights of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 Introduced in Lok Sabha Today

The Finance Minister, in his budget speech, while acknowledging the limitations under the existing law, had conveyed the considered decision of the Government to enact a comprehensive new law on black money to specifically deal with black money stashed away abroad. He also promised to introduce the new Bill in the current Session of the Parliament.

In order to fulfil the commitment made by the Government to the people of India through the Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015. The Bill provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the proposed new legislation.

The salient features of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 are as under:-

Scope – The Act will apply to all persons resident in India. Provisions of the Act will apply to both undisclosed foreign income and assets (including financial interest in any entity).

Rate of tax – Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed.

Penalties – Violation of the provisions of the proposed new legislation will entail stringent penalties.

The penalty for non-disclosure of income or an asset located outside India will be equal to three times the amount of tax payable thereon, i.e., 90 percent of the undisclosed income or the value of the undisclosed asset. This is in addition to tax payable at 30%.

Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs.10 lakh. The same amount of penalty is prescribed for cases where although the assessee has filed a return of income, but he has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.

Prosecutions – The Bill proposes enhanced punishment for various types of violations.

The punishment for willful attempt to evade tax in relation to a foreign income or an asset located outside India will be rigorous imprisonment from three years to ten years. In addition, it will also entail a fine.

Failure to furnish a return in respect of foreign assets and bank accounts or income will be punishable with rigorous imprisonment for a term of six months to seven years. The same term of punishment is prescribed for cases where although the assessee has filed a return of income, but has not disclosed the foreign asset or has furnished inaccurate particulars of the same.

The above provisions will also apply to beneficial owners or beneficiaries of such illegal foreign assets.

Abetment or inducement of another person to make a false return or a false account or statement or declaration under the Act will be punishable with rigorous imprisonment from six months to seven years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.

Safeguards – The principles of natural justice and due process of law have been embedded in the Act by laying down the requirement of mandatory issue of notices to the person against whom proceedings are being initiated, grant of opportunity of being heard, necessity of taking the evidence produced by him into account, recording of reasons, passing of orders in writing, limitation of time for various actions of the tax authority, etc. Further, the right of appeal has been protected by providing for appeals to the Income-tax Appellate Tribunal, and to the jurisdictional High Court and the Supreme Court on substantial questions of law.

To protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of upto Rs.5 lakh at any time during the year will not entail penalty or prosecution.

Other safeguards and internal control mechanisms will be prescribed in the Rules.

One time compliance opportunity – The Bill also provides a one time compliance opportunity for a limited period to persons who have any undisclosed foreign assets which have hitherto not been disclosed for the purposes of Income-tax. Such persons may file a declaration before the specified tax authority within a specified period, followed by payment of tax at the rate of 30 percent and an equal amount by way of penalty. Such persons will not be prosecuted under the stringent provisions of the new Act. It is to be noted that this is not an amnesty scheme as no immunity from penalty is being offered. It is merely an opportunity for persons to come clean and become compliant before the stringent provisions of the new Act come into force.

Amendment of PMLA – The Bill also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA.

Thus, in keeping with the commitment of the government for focussed action on black money front, an unprecedented and multi-pronged attack has been launched to root out the menace of black money. The Government is confident that this new law will act as a strong deterrent and curb the menace of black money stashed abroad by Indians.


7 comments on “Download The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015
  1. it reminds me a situation what PM of province of Quebec passed an Act (an abuse of licensing powers..an administrative law) ..’a liquor license to a proprietor of a restaurant’ had been cancelled by the Quebec Liquor commission’ under an Act passed by PM of the province of Quebec…as the Jehova’s witnesses, (who were nuisance to to the Police) ;

    The Supreme court of Canada awarded Damages against the prime Minister and stigmatized the cancellation as….
    .. ‘ a gross abuse of legal power expressly intended to punish him for an act wholly irrelevant to the statute , a punishment which inflicted on him (proprietor of restaurant) , as it was intended to do, the destruction of the ‘economic life’ as a restaurant keeper within the province.’

    And in addition,

    it was said….

    To deny or revoke a permit because a citizen exercises an ‘unchallengeable right of getting ‘bail’ for ….totally irrelevant to the sale of liquor in a restaurant is equally beyond the scope of of the discretion conferred…’ (The law was admirably stated by a Canadian judge in a celebrated case
    where a liquor license had been unlawfully cancelled for extraneous political reasons, purportedly under an Act which said that liquor commission , ‘may cancel any permit at the discretion’…,Rand J said…

    In public regulation of this sort (here in black money issue apparently with a new criminal tax law contemplated by the BILL with a series of penalties,as if every foreign holdings are essentially as if a laundering is the implication as severe penalties are imposed as if that tax payer to be is essentially some kind of criminal is the presumption..), THERE IS NO SUCH THING AS ‘ABSOLUTE’ AND ‘UNTRAMMELED DISCRETION’ , THAT IS that action can be taken on any ground or for any (other) reason that can be assumed to the mind of administrator , no legislative Act can , without Express language…be taken to contemplate an UNLIMITED ARBITRARY POWER ,exercisable for any purpose , however capricious or irrelevant , regardless of the nature or the purpose of the statute.

    Fraud and corruption in the commission may not be mentioned in such statutes but they are always implied as Exceptions.

    Discretion necessarily implies ‘Good Faith’ in discharging PUBLIC DUTY; THERE IS ALWAYS a perspective within which a statute is intended to operate , and any CLEAR DEPARTURE from its lines or objects is just AS OBJECTIONABLE AS ‘FRAUD’ OR ‘CORRUPTION’… ( RONCARELLI V DUPLESSIS (1959) 16 DLR (2d) 689 at 705…

    One has to read with Lord Diplock observation in (1977) AC at 1067…..’The very concept of administrative discretion involves a right to choose between more one possible course of action upon which there is room for ‘reasonable..’people to hold DIFFERING OPINION as to which is to be preferred….’

    In this connection please read Lord Hailsham….LC …has said .. ‘ two reasonable persons can perfectly reasonably come to ‘opposite conclusions’ on the same set of facts without ‘forfeiting’ their title to be regarded as reasonable…(Short v Poole Cpn, (1926) Ch.66 and 91)

    Standard indicated by a true construction of the Act which distinguishes between ‘ what the statutory authority may or may not be authorized to do.

    It distinguishes between ‘proper use’ and ‘improper use’ of power.

    It is often expressed by saying that the decision is UNLAWFUL if it is one to which no reasonable authority could have come . This is the essence of WEDNESBURY unreasonableness………!

    so Jaitley need to be very careful in this Bill, else he would face unnecessary hardship, like now Dr.Manmohan singh is facing in coalgate issue in the trial court summon, after all none is above law, is it not?

    so my view is discretion is better than valor!

  2. MRK Gandhi says:

    Sixty years of democracy has emboldened the crooked politicians and businessmen to stash their ill-gotten income in foreign countries. Times without number our politicians draft laws to save those ill-gotten funds by imposing certain sum as tax/penalty. Our apex court has in fact cautioned the Governments in grating amnesty to crooks and wrong doers. But only history repeats. I do not know what our apex court will do this time. Whether it is BJP or congress or any other political party it makes no difference. Condoning the wrong doing is unique to our country. Our great PM has made gigantic promise of bringing money stashed in foreign banks, of course he did not promise he will sent the the wrong doer to prison. The only hope now is our Apex Court whether it will take a high moral ground or let the governments extend amnesty. Unfortunate I feel I am a citizen of this country where law is blatantly circumscribed to suit wrong doers. Sorry MODIJI never felt you will also kneel down; ANYWAY YOU ARE ALSO A POLITICIAN.

  3. sir,

    if you are really serious my dear friend in jaitley you need to look back every one of the parliamentarian then you soon would realize your law making is just a futile exercise.

    so in every legislature this law making problem.

    it was said in 1820s by lord chief justice Bingham or so that no legal draftsman is able to draft any sensible legislation..when history is so do you think in this hurry world legal draftsman species could make any meaningful legislation.

    that is the basic reason we needed courts to assess the very laws before applying that so called laws on facts of each case….if not there could have been a milky way in the horizon as no human man would be alive by now!

  4. do not fall in trap in legislation after all no legislation turns a full circle my dear friends,after all every legislation is full of loop holes those loop holes only created black moneys all over my dear great legislators…but yet all have blissfully forgotten to look behind them!

  5. Never any angry reaction ever worked any where.

    see recently siddharamaiah as CM in karnataka never liked to allow CBI inquiry in an IAS officer so called ‘ suicide’ case a few days ago.. i do not know or wonder what legislators want to achieve!

  6. sirs,
    our first indian constitutional amendment indeed started like this great bill when it introduced schedule IX which got rectified in 2007 by CJI retd mr.YK Sabarwal… it seems even after 65+ years our administrators are yet to be in the infant stage it seems…great indian vibrant democracy..

    see sir, it is a well known fact globalization of economics has fraught with lot of deficiencies, Prof Samuelson , Prof .Leipzig brought to light the defects of international economics in early 20th century but luck should have it the same fag end of the century talked quite a lot of globalization thanks to great powers in government as also in legislatures all over the world…what they are facing today…do they ever think a little like what poet Davis said..’there is no time to stand and stare…’..any way best of luck to this 21st century my dear sirs !

  7. DR.G.BALAKRISHNAN PHD ML says:

    happy gudipadua/ ugadhi to all who follow this system any where in the world.

    i indeed see this bill on foreign accounts and the like with penalty provisions.

    Criminal jurisprudence is applicable on every law whatever legislature makes has to be bound by criminal jurisprudence, it appears our friend Arun Jaitley might have forgotten about though he himself was a good lawyer.

    I believe, if one becomes politicians especially advocates would they lose touch with jurisprudence as jurisprudence is common all over the world.

    if any law is passed in the lines of the bill, that would be bound to be set aside by constitutional courts after honorable constitutional courts cannot forget their principles of justice delivery, why in india Art 265 is indeed active…

    it seems parliamentarians today work in a hurry losing their normal walk of legislating, great india administrative law!

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