Government will provide a short window of a "few months" to income tax assesses to come clean by declaring their money and assets stashed abroad, pay tax and penalty and escape jail under the proposed tough law to unearth black money abroad.
The Union Cabinet last night approved the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015 with a view to put in place a legal framework to unearth black money and illicit assets stashed abroad.
It provides for a maximum of ten years rigorous imprisonment for offenders, who conceal income and assets and indulge in evasion in relation to foreign assets.
Under the provisions of the new Bill, the offence will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission for resolution of disputes. There will also be a penalty at the rate of 300 per cent of taxes on the concealed income and assets.
"The dates for declaring the overseas assets will be notified after the passage of the bill on the black money by Parliament," a senior Finance Ministry official said today.
The assesses will be given a few months time to declare their overseas assets, the official said, adding the bill would also provide for a rigorous jail term of 10 years for concealment of such income.
The proposal to come out with a new law on the black money was mooted by Finance Minister Arun Jaitley in his budget speech.
The Bill seeks to make non-filing of income tax returns or filing or returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment of up to 7 years.
Concealment of income and assets and evasion in relation to foreign assets will be prosecutable with punishment of 10 years of rigorous imprisonment.
The Bill is likely to be introduced in the Lok Sabha before it adjourns for a month long recess.
The government has been under pressure to act on the issue of black money stashed abroad as the BJP and Modi had mounted a huge campaign during the Lok Sabha election last year with promise to quickly repatriate such illegal wealth.
Individuals, entities, banks and financial institutions would be liable for prosecution and penalty if found abetting such offences.
Concealment of income or tax evasion in relation to a foreign asset will be made "predicate offence" under the PMLA, enabling enforcement agencies to attach and confiscate such assets.
The new legislation will provide that income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate. Exemptions or deductions, which may otherwise be applicable in such cases, shall not be allowed.
Beneficial owner or beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income.
Date of opening of foreign account would be mandatorily required to be specified by the assessee in the return of income.