All about Black Money Undisclosed Foreign Income and Assets (Imposition of Tax) Act,2015 By: Roopam Vishwakarma and Shivangi Garg

Q1. What is Black Money ?

Black Money refers to the money which is not fully a legal property of the owner. It is normally received in terms of cash from economic activities. i.e. Individuals who received it must hide it, spend it on for the fulfilment of their needs. 

According to National Institute of Public Finance and Policy (NIPFP) defines- “Black Money is the aggregate of incomes which are taxable but not reported to authorities.”

Q2. What includes Black Money In India ?

Black Money is produced in every sector of our Country. It may include sectors like estate, jewellery, financial market, education, ministers to promote elections,liquor trade, external trades, etc. These may Involve Senior Officers, Ministers, Businessmen, Industrialists and many more.

Q3. Is there any Statute for Black Money In India?

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is an Act of the Parliament of India.The Act was passed on 26 May 2015 with the assent of the President of India and came into effect from 1 July 2015. The aim of this act is to curb and bring back the black money, or undisclosed foreign assets and income and imposes tax and penalty on such income.  

Q4. What are the Charge Of Tax?

A charge at the rate of 30 per cent tax would apply to undisclosed foreign income or assets of the previous assessment year since 1st April 2016.No exemption, deduction or set off of any carried forward losses would apply.

Q5. What is the Scope of total undisclosed income to be taxed?

The total undisclosed income includes:

1. the income from a source located outside India, which has not been disclosed in the return of income
2. the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished
3. the value of an undisclosed asset located outside India.

Q6. What includes Tax Authority according to Black Money Act?

The relevant tax authorities and their jurisdiction would be according to the Income Tax Act.  They would have powers of inspection of documents, and evidence.

Q7. What are the circumstances where Declaration of undisclosed money by the assessee shall be invalid? 

1. If the declarant fails to pay the entire amount of tax within the given period time
2. If the declarant intends to misrepresents the facts or information in the declaration.

In any of the above cases it shall be deemed as never the declaration has been filed by the assessee and all the provisions of this act including the penalties will apply accordingly.  

Q8. What are the Penalties?

1. The penalty for nondisclosure of foreign income or assets would be equal to three times the amount of tax payable, in addition to tax payable at 30%.
2. The penalty for not furnishing income tax returns in relation to foreign income or assets is a fine of Rs 10 lakh.  This would not apply to an asset, with a value of five lakh rupees or less.
3. If a person who has filed tax returns does not disclose his foreign income, or submits inaccurate details of the same, he has to pay a fine of Rs 10 lakh.  This would not apply to an asset, with a value of five lakh rupees or less.  
4. Any person, who continues to default in paying tax that is due, would be liable to pay an amount equal to the amount of tax arrears.  
5. If a person fails to abide by the tax authority in (i) answering questions, (ii) signing off on a statement, (iii) attending or producing relevant documents, he is to pay a fine between Rs 50,000 to two lakh rupees. 

Q9. What are the offences and prosecution under Black Money Act?

• If a person fails to furnish return in relation to foreign income and asset he shall be punished with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.
•  If a person fails to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.
• If a person, being a resident other than not ordinarily resident in India wilfully attempts in any manner to evade any tax, penalty or interest chargeable or imposable under this Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine.
• If a person, makes a statement in any verification under this Act, delivers an account or statement which is false shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.
• If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to tax payable which is false and which knows to be false he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.
• For any offence under this Act, every person responsible to the company is to be liable for punishment.  His liability is absolved if he proves that the offence was committed without his knowledge.

Q10. What is the One time compliance opportunity ?

The Act provides one time compliance opportunity to the assessee to declare his undisclosed foreign income before the Tax Authority within a specified period of time followed by the payment of tax of 30 per cent. Provided that the person has still not escaped from the provisions of the penalties of this act but however he is safeguarded from the prosecution under this Act.