Consequent upon the ‘Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Bill, 2015’ being passed by both the houses of the Parliament and having received President’s assent, Union Government is expecting a huge quantity of declarations under the compliance window provided by the new Black Money law. The I-T Dept. as per information available is going to set up two centres, in Delhi and Mumbai, to process claims from those with dodgy overseas wealth to declare. Following are the highlights of the proposed two windows:
• Special cells to be set up in Delhi and Mumbai to receive disclosures.
• There will be sensitivities in dealing with disclosures and the windows will ensure effective and non-intrusive processing of information in a focused manner.
• Compliance window could be open for 2-3 months to declare undisclosed income and assets.
• A further period of 6 months could be provided to make tax payments in compliance with the disclosures so made.
• The windows will be manned by hand-picked officials.
• Teams will consist of top officials of I-T Dept.
• The teams will have direct access through hotline with the Apex body-CBDT.
• CBDT to keep a close watch on the whole process.
• Resident Indians may have legitimate, tax paid income overseas. Under double taxation treaties, taxes paid will be given credit when income computed in India under the disclosure.
• Government is keen to ensure no harassment to declarants so as to ensure the success of the black money scheme, though not called as ‘Amnesty Scheme’.
2. The above planning of windows is as a result of serious deliberations at the highest level of Finance Ministry on how to implement the new law. Government is aware of the concerns over potential harassment and it clearly wants to avoid any missteps on this account. So, this is a hallmark outlined for the success of the scheme.
3. As per the law, it provides a compliance window for all those who have undeclared foreign assets or income to come clean, after paying 30% tax and 30% penalty. Any wealth or income discovered later will lead to confiscation, imposition of further penalties and prosecution under criminal laws, which could lead to imprisonment up to 10 years.
4. Given the stiff nature of the deterrent, tax officials are of the opinion that many people will want to come clean. Experts in the field agree that this could happen if those with undeclared wealth feel assured that they will not be, surely, harassed.
5. Many of the people interacted with the above piece of legislation and the sure assurance given by the Govt. will have wide ranging implication. Yet, the key will actually be on how the Govt. will enforce this and what sort of machinery is intended to place to secure compliance of the law.
6. Earlier, Finance Minister Arun Jaitley said : “We are going to make sure that there is no scope for misuse, but at the same time, there is deterrent punishment for those who stock money abroad.”
7. Incidentally, it may be stated that there is no estimate of the quantum of black money with Indians. At the end of 2013, Swiss Bank were reported to have deposits of
Rs. 14,100 crore from Indians, up from Rs. 8,547 crore a year ago. It is thus not clear how much of this is black money in the sense of being proceeds of tax evasion or crime.
8. ‘Global Financial Integrity’ estimated an average $ 44 billion outflow from India every year between 2003 and 2012.
9. All in all, to conclude, it is a wonderful scheme for the black money holders of money and assets, to come clean and take advantage of this scheme meant for them, in their own interest as well as in the interest of the revenue, so that they can have peaceful night’s sleep which so far they were not having !
10. Till the date of writing this article, no Gazette Notification is issued and procedural forms and rules are awaited.
D. H. Joshi, Advocate