The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is another step in the direction taken in pursuance of the announcement made in the budget providing effective deterrence against not disclosing foreign income and assets abroad as required under the Income Tax Act. The consequences provided are severe and very harsh by way of provisions which may not only be termed confiscatory but also entail severe punishment on prosecution launched for offences under the Act. A further sting is provided by declaring such provisions as in addition to and not in derogation of offences under any other legislation, which may result in prosecutions under the Income Tax Act and other Acts as well as under this Act, unless saved by the doctrine of double jeopardy. Making the undisclosed foreign asset taxable under the Act in the year in which information relating thereto is received and subjecting them to tax at their market value are provisions which not only make time limitations irrelevant but also bring unrealized Gains to tax. The Act being applicable to all residents is likely to impact several unintended innocent persons like expatriates and their family members returning NRIs, Mariners Seafarers, who are subjected to disclosure requirement of their foreign assets simply because of their tax status. It will impact beneficiaries of the trust, persons having signing authority, persons having interest in an entity even when they do not own any asset abroad. It will impact consultants, bankers and financial planners coming within the category of abettors. It will impact the practice of a complicated organizational structures and bring within its fold resident entities within the network of group entities. The Acts, provided for a limited window, hereinafter referred to as 'Window Scheme', to persons who have any undisclosed foreign asset in order to enable them to avoid the impact of new provisions when they are applied to them. The declaration envisaged under the window scheme is a declaration of foreign asset which was acquired out of undisclosed taxable income relating to assessment year upto the A.Y. 2015-16. In other words, either no return of income was filed in respect of the income from which the asset was acquired or the income was not disclosed to the department in the return filed under the Income Tax Act or even if a return was filed, such income escaped assessment by reason of the omission or failure on the part of the person to make a return or to disclose fully and truly all material facts necessary for the assessment.
PENALTY FOR FAILURE TO FURNISH IN THE RETURN, ANY INFORMATION OR FURNISHING INACCURATE PARTICULARS ABOUT AN ASSET LOCATED OUTSIDE INDIA. For a person who files the return under that section of the Income Tax Act but fails to furnish any information therein or, furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India held by him as a beneficial owner or otherwise or relating to any income from a source located outside India, he may be subject to imposition of penalty of a sum of Rs. 10.00 Lakhs.
From the express wordings of the Act regular provisions for taxation, penalty and prosecution (sections 3 to 58) apply to all residents other than not ordinarily residents while One-Time Compliance Scheme (sections 59 to 72) shall apply to all persons irrespective of residential status subject of course to section 71. So it appears that OTCS would apply to all persons irrespective of residential status.
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