Declare foreign assets as time is running out, govt. tells those with assets abroad

"Why Hide when you can abide?" This is the very public though veiled warning of the Department of Income Tax of the Government of India to holders of undisclosed foreign income and assets.

In advertisements featured very prominently in all major dailies on Wednesday, the income tax department has said that such account holders would do well to "Declare your Undisclosed Assets Abroad on or before 30th September, 2015".

This missive is followed by "PAY TAX .... KARO RELAX"

The advertisement shows a black-suited man with one hand behind his back with a wad of foreign and Indian currency, instructively suggesting that such activity is illegal and unacceptable to the Indian Government.

The advertisement states that under the "Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which has come into force from July 1, 2015, a declarent can make a declaration under Section 59 before the designated income tax commissioner by the above mentioned date, and he or she can pay the tax and penalty totalling 60 percent of the value of the undisclosed asset by December 31, 2015.

It also warns that if a person or persons fail to declare their undisclosed income or assets, they are liable for payment of tax a dn penalty totalling 120 percent of the value of the undisclosed income or assets, and rigorous imprisonment of upto ten years.

Simultaneously, the income tax department has warned that action will be taken against the erring individual under the Prevention of Money Laundering Act (PMLA).

The department advertisement also lists the web site (incometaxindia.gov.in) for an individual wanting access to more details.

The advertisement concludes with a message of warning in red "Are You Aware" that information on financial accounts abroad is now accessible to the Income Tax Department.

According to a White Paper on Black Money in India report, published in May 2012, Swiss National Bank estimates that the total amount of deposits in all Swiss banks, at the end of 2010, by citizens of India were CHF 1.95 billion (INR 92.95 billion, USD 2.1 billion).

In February 2012, the director of the Central Bureau of Investigation said that Indians have USD 500 billion of illegal funds in foreign tax havens, more than any other country.

In March 2012, the Government of India clarified in its parliament that the CBI Director's statement on USD 500 billion of illegal money was an estimate based on a statement made to India's Supreme Court in July 2011.

In April 2014, Indian Government disclosed to the Supreme Court the names of 26 people who had accounts in banks in Liechtenstein, as revealed to India by German authorities.

On October 27, 2014, Indian Government submitted name of three people in an affidavit to the Supreme Court who have black money accounts in foreign countries. But on the very next day, the Supreme Court of India ordered the Centre to reveal all the names of black money account holders which they had received from various countries like Germany.

The honorable bench of the Supreme court also asked the Centre not to indulge in any kind of probe, but to just pass the names to them and Supreme court will pass the order for a further probe.

Following the order, the Government of India submitted the names of 627 people in the Supreme Court of India in a sealed envelope on October 29, 2014.

On May 12, 2015, well known lawyer and former union cabinet minister Ram Jethmalani attacked the Narendra Modi-led NDA Government for failing to bring back black money as was promised before the 2014 general election.

The Indian Government has repeatedly argued before the court that it cannot divulge the names of those persons having black money accounts abroad, as the privacy of individuals would be violated by the revelation of such data, and could comprise double taxation agreements reached with the foreign nations.

As per Schneider estimates, using the dynamic multiple-indicators multiple-causes method and by currency demand method, the size of India's black money economy is between 23 to 26 percent, compared to an Asia-wide average of 28 to 30 percent, to an Africa-wide average and a Latin America-wide average of 41 to 44 percent of respective gross domestic products.

According to this study, the average size of the shadow economy (as a percent of "official" GDP) in 96 developing countries is 38.7 percent, with India said to be below average.