Black money is the money that is undisclosed for tax or the money on which tax is not paid. Government of India has taken a decision to curb the black money, which shook the entire nation recently. Due to this decision a lot of such money on which tax has not been paid, has been brought to light.
About the Act:
Black money (undisclosed Foreign Income & Assets) and imposition of tax Act 2015 was passed on 26th May 2015.
This Act deals with black money i.e., undisclosed foreign income & assets and the procedures of dealing with foreign income and assets and tax impositions on such undisclosed incomes and assets held outside India.
Rate of tax:
Tax rate is 30% of total undisclosed income and assets of the previous year. This will apply to each assessment year separately.
Valuation of Undisclosed Asset:
The market value of an asset located outside India would be equivalent to its value in that location.
Important points to be noted:
1. Deductions and exemptions inset off or carry forward losses are permitted.
2. Punishment of 3-10 years of jail for willful evasion of tax can be imposed.
3. Penalty equal to 3 times of tax evaded also can be levied.
4. Failure to furnish return will attract a penalty of 10 lakhs
Opportunity of one-time compliance:
The Government of India may provide an opportunity, by notification, for one-time compliance and payment of taxes with penalty for a limited period.
Some forms that are used:
Form 1: If any tax, penalty, interest has to be paid by the assesse, the AO issues Form 1 (notice of demand).
Form 2: If the assesse wishes to appeal against the notice of demand (Form 1) to the commissioner, he shall submit it in a signed Form-2 with a fee of 10,000.
Form 3: Form 3 is used for an appeal to the appellate tribunal. A fee of 25,000 has to be paid.
Form 5:It is the form that contains tax arrears,issued by the Tax Recovery Officer.
Form 6: It is the form in which the assessee is to declare his undisclosed assets located outside India.
Form 7: It is the form in which the principal commissioner issues an acknowledgement within 15 days from the date of receipt of Form-6 is from the assesse.
Rounding-off of Income, tax and value of Asset:
Any amount payable or receivable must to be rounded-off to the nearest 100's.
It should be noted that assesses having bank accounts in foreign countries with minor balance, that are not reported due to overlooking, are protected from huge penalties by the department of Income Tax. The department will not levy any penalty if the accumulated balance from such accounts does not exceed Rupees Five Lakhs (Rs. 5,00,000).
It is better for people who have foreign assets and income to disclose their incomes every year. Failure to report will evoke numerous penalties and may also lead to prosecution.