The foreign assets Bill
Black money window: No relief for offenders reported till June 30
The foreign assets Bill introduced in this year’s Budget provides for criminal punishment for tax evasion; it doesn’t provide for any compounding mechanism or settlement procedures for offences. A wilful attempt to evade tax liability, including payment of any interest or penalty under the foreign assets Bill, attracts rigorous imprisonment of three years to 10 years, as well as a discretionary fine.
Besides, non- filing of income tax returns or filing incorrect returns with respect to foreign assets is a punishable offence, with imprisonment of six months to seven years, along with a discretionary fine. A second and subsequent offence is punishable with rigorous imprisonment for three to ten years and a fine
Corporate lawyers say even if an evader declares assets under the compliance window and pays the penalty and tax, she/ he runs the risk of being penalised under the Income Tax and Foreign Exchange Management Acts if her/ his name is pending with the government as of June 30 this year and no notice has been sent to the evader. “ As there is no way for anyone to ascertain whether his/ her name is pending before the government, the tax evader runs the risk of being penalised under various laws. Besides, the rules say the tax paid under the compliance window will not be returned under any circumstance,” said a Mumbai- based tax lawyer. “ It might lead to litigation and harassment.” For the government, the good news is the compliance window has already created aflutter among many in India’s financial capital, including corporate leaders, jewellers, real estate players and Bollywood personalities, who are rushing to tax lawyers and chartered accountants, seeking details about the scheme.
While some are believed to have initiated steps to secure citizenship of other countries, many promoters of mid- and small- sized companies are planning to comecleanthroughthescheme.“ Inevery large business family, there is at least one member who is either a foreign national orplanningtobecomeone,” saidalawyer. “A lot of money and real estate assets are owned by companies registered in tax havens, with absolutely no links with the ultimate beneficiary,” he added.
Tax lawyers say this year’s scheme is different from the Voluntary Disclosure of Income Scheme ( VDIS) of 1997, as the tax and penalty are far higher this time. Under the VDIS, the tax on individual evaders was 30 per cent; for companies, it was 35 per cent. These rates were almost similar to the tax rates prevalent at that time; as such, there was no penalty for tax evasion. After the matter was taken up by the Supreme Court, the government had to give an undertaking that it wouldn’t come out with a similar scheme in the future.
Under this year’s one- time compliance window, taxpayers will have to pay 30 per cent tax and a penalty equal to the total tax levied on the undisclosed foreign assets. The tax and penalty have to be paid by December this year. And, the income tax department has to give an acknowledgment to the taxpayer within 15 days ( by January 15, 2016).
The declaration made by the taxpayer in this regard will not be used as evidence for prosecution under the Foreign Exchange Management Act, 1999; the Income Tax Act; the Wealth Tax Act, 1957; the Companies Act, 2013; or the Customs Act, 1962.
Corporates lawyers say though the compliance scheme is a golden opportunity for tax evaders to come clean, if they miss the September- end deadline for filing declarations, they run the risk of being penalised severely under the Fema (for which the penalty is three times more than the amount involved).
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government as of June 30 |As there is no way for anyone to ascertain whether his/ her name is pending, the tax evader runs the risk of being penalised under various laws |Besides, the rules say the tax paid under the window will not be returned under any circumstance |Many in Mumbai, including corporate leaders, jewellers, real estate players and Bollywood personalities, are seeking details about the scheme |While some are believed to have initiated steps to secure citizenship of other countries, many promoters of mid- and small- sized companies are planning to come clean through the scheme
This scheme is different from the Voluntary Disclosure of Income Scheme, as the tax and penalty are far higher this time more
The foreign assets Bill introduced in this year’s Budget provides for criminal punishment for tax evasion; it doesn’t provide for any compounding mechanism or settlement procedures for offences. A wilful attempt to evade tax liability, including payment of any interest or penalty under the foreign assets Bill, attracts rigorous imprisonment of three years to 10 years, as well as a discretionary fine.
Besides, non- filing of income tax returns or filing incorrect returns with respect to foreign assets is a punishable offence, with imprisonment of six months to seven years, along with a discretionary fine. A second and subsequent offence is punishable with rigorous imprisonment for three to ten years and a fine
Corporate lawyers say even if an evader declares assets under the compliance window and pays the penalty and tax, she/ he runs the risk of being penalised under the Income Tax and Foreign Exchange Management Acts if her/ his name is pending with the government as of June 30 this year and no notice has been sent to the evader. “ As there is no way for anyone to ascertain whether his/ her name is pending before the government, the tax evader runs the risk of being penalised under various laws. Besides, the rules say the tax paid under the compliance window will not be returned under any circumstance,” said a Mumbai- based tax lawyer. “ It might lead to litigation and harassment.” For the government, the good news is the compliance window has already created aflutter among many in India’s financial capital, including corporate leaders, jewellers, real estate players and Bollywood personalities, who are rushing to tax lawyers and chartered accountants, seeking details about the scheme.
While some are believed to have initiated steps to secure citizenship of other countries, many promoters of mid- and small- sized companies are planning to comecleanthroughthescheme.“ Inevery large business family, there is at least one member who is either a foreign national orplanningtobecomeone,” saidalawyer. “A lot of money and real estate assets are owned by companies registered in tax havens, with absolutely no links with the ultimate beneficiary,” he added.
Tax lawyers say this year’s scheme is different from the Voluntary Disclosure of Income Scheme ( VDIS) of 1997, as the tax and penalty are far higher this time. Under the VDIS, the tax on individual evaders was 30 per cent; for companies, it was 35 per cent. These rates were almost similar to the tax rates prevalent at that time; as such, there was no penalty for tax evasion. After the matter was taken up by the Supreme Court, the government had to give an undertaking that it wouldn’t come out with a similar scheme in the future.
Under this year’s one- time compliance window, taxpayers will have to pay 30 per cent tax and a penalty equal to the total tax levied on the undisclosed foreign assets. The tax and penalty have to be paid by December this year. And, the income tax department has to give an acknowledgment to the taxpayer within 15 days ( by January 15, 2016).
The declaration made by the taxpayer in this regard will not be used as evidence for prosecution under the Foreign Exchange Management Act, 1999; the Income Tax Act; the Wealth Tax Act, 1957; the Companies Act, 2013; or the Customs Act, 1962.
Corporates lawyers say though the compliance scheme is a golden opportunity for tax evaders to come clean, if they miss the September- end deadline for filing declarations, they run the risk of being penalised severely under the Fema (for which the penalty is three times more than the amount involved).
.
government as of June 30 |As there is no way for anyone to ascertain whether his/ her name is pending, the tax evader runs the risk of being penalised under various laws |Besides, the rules say the tax paid under the window will not be returned under any circumstance |Many in Mumbai, including corporate leaders, jewellers, real estate players and Bollywood personalities, are seeking details about the scheme |While some are believed to have initiated steps to secure citizenship of other countries, many promoters of mid- and small- sized companies are planning to come clean through the scheme
This scheme is different from the Voluntary Disclosure of Income Scheme, as the tax and penalty are far higher this time more
Viewed by 220
There should be severe punishment for financial crime; we should follow USA in this regard. As on date we are simply talking of policy not its implementation. There should be severe punishment even for telling a lie. What Mr. Deverajan has mentioned will be the result. Corruption is so deep rooted its removal is not easy because politician have property of thousands of crores, how they got it nobody is questioning. In this backdrop only god is going to help us. more
Jul 06
Whatever said and done, the bigwigs and corporate who have political backing will come out unscathed and nothing can be done . It is the small tax payers who bear the brunt of the law and fear . it is the fixed income group which\ suffer most. more
Jul 05
