BLACK MONEY BILL 2015

Sobti & Associates

Sobti & Associates

Black money is tax-evaded income. It is a money earned but not reported to the Government for tax purposes.

It can be earned both through legal and

illegal means.

It is generated at the rate of Rs. 50,000 Crore per year.

Black Money Meaning :-

Sobti & Associates

Undisclosed Foreign Income & Assets bill 2015, popularly known as Black Money Bill is currently passed in Lok Sabha & Rajya Sabha.

The bill will be enacted once it is cleared by both the houses of parliament and receives Presidential assent.

The Bill if enacted, shall come into force from 1 April , 2016.

It extends to whole of India.

Introduction

Sobti & Associates

The Special Investigation Team on black money informed the Supreme Court that 339 accounts in HSBC bank held by Indians had a net amount of Rs 6,400 Crore on which the income tax department has raised a demand of Rs 4,520 Crore.

Sobti & Associates

Person having R+OR in India & also Indian Companies.

Applicability

Sobti & Associates

A person should be Resident in India if he fulfills either of these two conditions: -

1)He/she has been in India in previous year for 182 days or more.

or 2)He/she has been in India for 60 days or

more in previous year and 365 days or more in the 4 years preceding previous year.

RESIDENT MEANING :-

Sobti & Associates

A person is an OR if he meets both of these two conditions: -

1)He/she has been resident in India in 9 out of the 10 years preceding previous year,

and 2)He/she h as, during the seven previous

years preceding that year, been in India for a period of 729 days or less.

ORDINARY RESIDENT MEANING :-

Sobti & Associates

Income from source located outside India which has not disclosed in ROI filed by the assesse.

Value of undisclosed asset located outside India.

Undisclosed foreign income & assets means:

Sobti & Associates

1. FMV of undisclosed asset.

2. Asset including financial interest in any entity.

Financial interest means : Interest that could result in directly or indirectly receiving a pecuniary gain or sustaining a pecuniary loss as a result of ownership or interest in a business entity, or as a result of salary, gratuity, or other compensation or remuneration from any person.

Value of undisclosed asset means :

Sobti & Associates

Undisclosed income or asset shall be taxed at flat rate of 30 %.

No exemption or deduction or set off of any carry forward losses shall be allowed.

Undisclosed Income

Sobti & Associates

Offence Penalty

First time offence :-

Willful evasion of Tax 3 time of Tax+ Imprisonment(3 years- 10 Years)

Failure to File Return/Furnishing Inaccurate Particulars

Rs 10 Lacs + Imprisonment (6months-7years)

Subsequent offence :- Rs5 lakhs to 1 Cr + upto 10 years

Cost of Non- Compliance:-

Sobti & Associates

Assessee also allowed to get one time opportunity to declaring them. Time period will be notified after passing the bill. But it is only an opportunity to come clean & relief from stringent provisions of imprisonment.

They can file declaration of income or/and Asset : pay tax @ 30% Flat rate + penalty=tax amount.

Upon fulfilling these conditions a person shall not be prosecuted under the bill and the declaration made by him will not be used as evidence against him under the Wealth Tax Act , FEMA Act, Co. Act or any other Act.

Safeguards

Sobti & Associates

Failure to report bank account with maximum balance of Rs. 500000 at any time during the year will not entail any penalty or prosecution.

Protection to Minority Group :-

Sobti & Associates

The provisions of the bill also incorporate the provision dealing with assessment and the appellate mechanism i.e. 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 action of tax authorities etc

Procedure of Assessment and Appeals :-

Sobti & Associates

The bill empower to enter into agreement with other countries for exchange of information , recovery of tax & avoidance of double taxation.

DTAA PROVISION :-

Sobti & Associates

After window open to self declaration within time , you can not turn back later & claim that taxes are paid inanother jurisdiction & hence not declared.

Not declaring within stipulated time will also results in denial of credits under Double Taxation.

Appeal can also be filed to ITAT , H.C. & S.C. on substantial question of law.

OTHER POINTS :-

Sobti & Associates

Beneficiary of foreign assets will be mandatorily required to file return , even if there is no taxable income.

RETURN MANDATORY:-

Sobti & Associates

A house property located outside India was acquired by an assessee in the previous year 2009-10 for fifty lakhs rupees. Out of the investment of fifty lakhs rupees, twenty lakhs rupees was assessed to tax in the total income of the previous year 2009-10 and earlier

years. Such undisclosed asset comes to the notice of the Assessing Officer in the year 2017-18. If the value of the asset in the year 2017-18 is one Crore rupees, then the amount chargeable to tax shall be A-B=C , where:

A=Rs.1 Crore, B=Rs. (100 x 20/50) Lakh= Rs.40 Lakh, C=Rs. (100-40) Lakh=Rs.60 Lakh.

Example :-

Sobti & Associates

The black money bill covers some very important grounds in terms of covering the international aspects of black money held abroad.

The bill will not only result in increased tax collections but will also significantly enhance the investment climate in the country.

In this regard India and the 20 countries have committed to a global framework for information exchange.

It also results in better economic growth of the country.

In Summary :-

Sobti & Associates

Hope this presentation is useful for you.

Thank You

Sobti & Associates

CA Deepak KapoorYou can also reach me at :Gmail : cadeepakkapoor1@gmail.comContact: 9953443082 Whats app on -9034241990U can also like my facebook page – ICAI INDIA & Hindu

PREPARED BY :