There are major changes happening in the country since early November due to the demonetization announced by the Modi government. To put the demonetization act in simple words it means that the old INR 500 and 1000 notes will no longer be valid and need to be exchanged with other valid currency or new INR 500 or 2000 notes. This act was implemented to bring out the black money rolling in the Indian economy. In addition to just exchanging the notes a number of rules and regulations were made to curb the black money. This is the correct time for you to know all about the black money act.
The new Black Money Act of 2015 was launched by the Finance Minister Mr. Arun Jaitley in Lok Sabha on March 20. This act is lot more stringent and right now it is under implementation to deal with citizens who have unlawful earned income. Below are the key highlights of this act.
This act aspires to replace the Income tax act 1961 and proposes serious penalties and even criminal liabilities for evasion of tax with regards to foreign income.
The citizens will be liable to pay a flat rate of 30% tax for any foreign income or asset of the previous fiscal year. Also no exemption will be given for the losses incurred in the previous year.
Scope of Taxable income
There are many modes through which if income has been earned, it will be under the scope of taxation as per this act.
Any income earned from a source outside India that has not been declared in the tax file.
Any income earned from a source outside India for which no returns have been filed.
Value of assets located outside India that have not been disclosed.
A onetime opportunity was available for defaulters to declare income and assets for all previous years and pay a penalty at the rate of 100% for them to be spared for any prosecution.
There are stringent penalties suggested by this act than the Income tax act 1961.
Penalty for undisclosed foreign income or assets would be three times the taxable amount along with the 30% tax payable.
If income is not disclosed or inaccurately disclosed while filing the returns than a penalty of 10 lacs will be levied. This is however not applicable to assets of five lacs and under.
If there are repeated defaults on an individual’s end, he will be liable to pay a penalty equal to the tax arrears amount.
Apart from the penalties the act also has serious prosecution that can be applied for defaulters. For example, if there is willful tax evasion, the prison term of 10 years plus fine can be applied.
This act is the government’s move towards getting the black money related to foreign assets out in the economy. With the prosecution clause there is a sense of fear created to discourage citizens from acquiring unlawful income.Tweet