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May 15, 2015 / subramanyam

The Law on Black Money

The Rajya Sabha has  passed the Undisclosed Income and Foreign assets (Black Money) bill a few days ago. The final name of the bill may vary.  I am sorry if I got the nomenclature wrong but in effect this is a bill that arms the government to take action against the people who have black money in the banks and tax havens out side India.  Since Lok Sabha has also passed this one, this bill will soon be a law. (If it is not one already )

Some of the key facts about the bill.

1.  Any one who has evaded tax and has Black Money / assets abroad would be an offender and is punishable under this act.

2.  The max punishment for an offender can be up to 10 years of imprisonment.  They (the offenders) would also have to pay 90% of the asset value + prosecution charges + 30% of the asset value as a tax. So this is 120% of the asset value + Prosecution money that needs to be paid. This effectively neutralizes the asset.  The center (Government of India) can confiscate the assets in India to recover this.

3.  As this act comes now, the government is giving a window of opportunity to the ones who have black money abroad. They can disclose their assets voluntarily and then pay 30% of the asset value as tax and another 30% as fine . So the law makes sure that the offenders pay at least  60% of the asset value to the government.

4.  Since this gives out an opportunity for voluntary disclosure one might think that this is a amnesty scheme . This is not.  The names of the people who have disclosed their assets will not be kept secret.  Again they are not just paying the tax they are also paying the fine for not paying the tax,  hence this in no way is an amnesty scheme.

5.  The window for the voluntary disclosure of foreign assets would be decided by the government. This would be a one time exercise only.  In case there are  assets (that have been acquired with money /assets funded by tax evasions/ black money) that have not been disclosed in this window, they will be liable for the punishments declared in point 2.

6.  The tax liability for the overseas properties would be with the current market values of the property.

7.  The law also makes tax evasion on a foreign property as a predicate under Prevention of Money Laundering Act.  Not sure what this means, all I know is that this give powers to the enforcement agencies to go ahead and confiscate the property abroad.

8. This law is applicable on assets that are worth more than 5 Lakh Rupees.

It seems there would be a provision for direct information exchange on the financial transactions across the nations by 2017. So the tracking of black money would be all the way more easier from there on.

I was watching the debate on Rajya Sabha TV and that helped to come up with these points.  I liked the debate in Rajya Sabha, It was awesome.  Here is the reply of the Union Finance minister Shri Arun Jaitley to debate that happened on this issue in the Rajya Sabha.

One of the biggest promises of BJP in their run up to the 2014 elections has been about bringing back the black money that was stashed abroad.  Good to see that they are delivering on this.


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