A Compliance Window For India’s Black Money?

As the Asian Wealth Times reported on May 15th the Indian Government is pushing ahead with their desire to pull undisclosed assets back to the country.

The latest reports from India indicate that from the beginning of July persons with undisclosed income and assets abroad are expected to have a window of time to declare their holdings without necessarily facing prosecution. The proposed compliance window under the Undisclosed Foreign Assets and Income Act, which is colloquially known as the black money act is estimated to be in place for up to five months.

A senior government official said, "While a final decision is yet to be taken by the finance minister, the window will likely be in force from the first two weeks of July. The duration of the window may be three-five months."

The Indian government has refused to term the compliance window as an amnesty scheme as fresh tax and penalties will be levied. Some of the main points are:

  • Those taking advantage of the window can declare foreign assets and income and pay tax and penalty, each at 30% of the value of the asset.
  • Such entities won't be prosecuted under the Bill; such declarations won't be used as evidence under the Fema and the wealth tax, companies and Customs Acts.
  • After the compliance window is over and the Act is enforced, those with undeclared assets abroad will have to pay tax of 30% and a penalty of 90%.
Deliberate efforts to evade tax in relation to foreign income will be penalised with severe prison terms of between 3 to 10 years. Failure to furnish return of income from foreign assets, as well as to disclose the assets, will be punishable with rigorous imprisonment of six months to 7 years.

It is expected that upon his return to India around June 25th Indian Finance Minister Arun Jaitley will give the final details of the Undisclosed Foreign Assets and Income Act.

The black money bill is still being calibrated however and as many questions as answers still remain. There is lack of clarity on a range of issues, such as how fixed assets such as houses or other properties will be taxed.


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