ESSAY FOR SBI PO - BLACK MONEY BILL

BLACK MONEY BILL

The government introduced a Bill, specifically dealing with illicit money stashed in foreign banks abroad. This bill provides for separate taxation of an undisclosed foreign income or assets, in a bid to curb the generation of black money in the country. The Black Money Bill provides a short window to income tax assesses to declare assets, pay tax and penalty and avoid imprisonment. The Black Money Bill appears simple and comprehensive and has adopted a carrot-and-stick approach. Some of the salient features of the bill are mentioned below.

• It provides a one-time compliance opportunity to come clean on payment of a gross tax of 30% and an equal penalty.

• · The government proposes to make the Bill effective from the assessment year starting April 2016. The Foreign Income and Undisclosed Assets (Imposition of New Tax) Bill, 2015 provides for a maximum of 10 years rigorous imprisonment for offenders who evade taxes in relation to foreign assets.

• ·As per the Bill, concealment of foreign income and assets will be non-compoundable and offenders will not be permitted to approach the Settlement Commission for resolving disputes. There will also be a penalty at the rate of 300% of taxes on the concealed income and assets. 

• The Bill seeks to make non-filing of income tax returns or filing returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment up to seven years.

• Beneficiary of foreign assets will be mandatorily required to file return, even if there is no taxable income.

• Income from any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate.

• However, persons with minor balances upto Rs. 5 lakh at any time during the year will not entail penalty or prosecution.

The above mentioned provisions in the new Bill on Undisclosed Foreign Income and Assets is necessary to help the country to retain the wealth of our country in our country only. Hence this new Bill will be very heavy in terms of tax evasion by Indian residents by making investments outside India through undisclosed sources. The one time opportunity granted by the Government should be taken by all those persons who are in possession of undisclosed foreign income and assets.

Though the Black Money Bill is a good way to curb black money generation,but the biggest lacuna in the bill is that it does not speak anything regarding tracking the black money. The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 also known as the Black Money Bill does not have provisions to deal with domestic illegal assets and cash held on Indian soil.

Rather than wielding the stick, the government should stem generation of black money. This calls for reforms on many fronts: making political funding institutionalised and transparent, moderation of tax rates and reduction of the cost of compliance, regulation of real estate and adoption of the goods and services tax to create audit trails and widen the base. The larger point is for the government to encourage and respect wealth creation and, in turn, induce tax collections.