You are here: Home » Economy & Policy » News
Business Standard

Cabinet approves Black Money Bill

Likely to be tabled in Parliament on Friday

BS Reporter  |  New Delhi 

The Union Cabinet on Tuesday approved a Bill that seeks harsh penalties and rigorous imprisonment for those having unaccounted money abroad. The Bill, seeking to tighten the noose even on banks and financial institutions abetting such offenders, may even be tabled before Parliament goes for a recess from Saturday for a month. Announced by Finance Minister Arun Jaitley in his Budget speech for 2015-16, it imposes a penalty of 300 per cent of wealth hidden abroad on offenders and up to 10 years of rigorous imprisonment for them.

Parliament will break from March 21 to April 19, for a mid-session recess, and will reconvene after that. With nothing major on the Lok Sabha agenda over the next three days, the government is likely to introduce the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015, in the lower House in the first leg of the Budget session.

BEWARE OFFENDERS
The Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015...
  • Imposes a penalty of 300% of wealth hidden abroad; up to 10 years of rigorous imprisonment
  • Gives a “short window” to offenders to declare wealth, pay taxes & penalty and escape prosecution

A key finance ministry official said “it would be our endeavour to table the Bill by March 20 [Friday]”.

The Bill also seeks to make non-compoundable the offence of stashing away unaccounted money abroad.

Besides, the offenders will not be allowed to approach the Settlement Commission and non-filing of return or filing of return with inadequate disclosure of foreign assets will be liable for imprisonment up to seven years. The Bill also says income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset be taxable at the maximum marginal rate, 30 per cent plus surcharges. Any exemption and deduction will be disallowed and that beneficial owner or beneficiary of foreign assets will be required to file return, even if there is no taxable income, the Bill says.

However, the government will give a “short window” to those stashing black money abroad to declare their wealth, pay taxes and penalty, and escape prosecution under the proposed law. The government refused to call this amnesty or immunity since not only tax but penalty would also be imposed on offenders. The date of opening of a foreign account would be required to be specified by the assessee while filing return. Even abettors of the above offences —persons, entities, banks and financial institutions — will be liable for prosecution and penalty.

Getting back black money, particularly that hidden abroad, was one of the main planks of the Bharatiya Janata Party in the general elections. The issue gathered pace after the Supreme Court last year gave a list of 628 entities in the HSBC-Geneva list to a special investigative team (SIT). Many of these are getting ‘time-barred’ by the end of this financial year, that is, these cannot be acted against after the said period. The SIT on black money has widened its probe after revelations in this regard were made recently by International Consortium of Investigative Journalists.

According to the consortium’s report, 1,195 Indians, nearly double the previous list of 628 shared by the French government with India, figure in the HSBC list, with a total balance of Rs 25,420 crore. Many of the names have been in the public domain but there are additions, including those of corporate leaders, politicians and non-resident Indians.

Jaitley had said the veracity of the new names of Indians with Swiss bank accounts would be checked. There is no official estimate of black money stashed abroad. A report by non-profit Global Financial Integrity says India lost $439.59 billion (about Rs 28 lakh crore) to illicit outflows from 2003 to 2012. India ranks third in the world in illicit outflows at $94.76 billion (abouot Rs 6 lakh crore) in 2012, according to the report. Concealing income or evading tax related to foreign assets will be made a ‘predicate offence’ —a crime that provides resources for other criminal acts such as money laundering. Thus, these will be taken as offences under the Prevention of Money Laundering Act (PMLA). This will enable enforcement agencies to attach and confiscate unaccounted assets held abroad and prosecute those involved in laundering black money. PMLA will be further amended to enable attachment and confiscation of equivalent assets in India when the assets located abroad cannot be forfeited. Besides, the Foreign Exchange Management Act, will be amended to enable action against the holder of foreign exchange, foreign security or any immovable property outside India in contravention of the law. So far as circulation of black money in the domestic economy is concerned, a new and comprehensive Benami Transactions (Prohibition) Bill would be introduced, also in the current session of Parliament. This law will enable confiscation of benami property and provide for prosecution, blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, March 18 2015. 00:57 IST
RECOMMENDED FOR YOU
.