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Clarifications on Undisclosed Foreign Income and Assets

Clarifications on Undisclosed Foreign Income and Assets

 Clarifications on Undisclosed Foreign Income and Assets

Clarifications on Undisclosed Foreign Income and Assets

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as ‘the Act’) has introduced a tax compliance provision under Chapter VI of the Act. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (hereinafter referred to as ‘the Rules’) have been notified. In regard to the scheme queries have been received from the public about the scope of the scheme and the procedure to be followed. The Board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answers as follows.-

Question No.1:  If firm has undisclosed foreign assets, can the partner file declaration in respect of such asset?

Answer:  The declaration can be made by the firm which shall be signed by the person specified in sub-section (2) of section 62 of the Act. The partner cannot make a declaration in his name. However, the partner may file a declaration in respect of an undisclosed asset held by him.

Question No.2:  Where  a  company  has  undisclosed  foreign  assets,  can  it  file  a declaration  under  Chapter  VI  of  the  Act?  If  yes,  then  whether immunity would be granted to Directors of the company?

Answer:  Yes, the company can file a declaration under Chapter VI of the Act. The Directors of the company shall not be liable for any offence under the Income-tax Act, Wealth-tax Act, FEMA, Companies Act and the Customs  Act  in  respect  of  declaration  made  in  the  name  of  the company.

Question No.3:  Whether immunity in respect of declaration made under the scheme is provided in respect of Acts other than those mentioned in section 67 of the Act?

Answer:Section 67 provides immunity from prosecution under the five Acts viz. the Income-tax Act, Wealth-tax Act, FEMA, Companies Act and the Customs Act. It does not provide immunity from prosecution under any other Act. For example- if the undisclosed asset has been acquired out of the proceeds of sale of protected animals the person will not be eligible for immunity under the Wildlife (Protection) Act, 1972.

Question No.4: Whether  the  person  making  the  declaration  will  be  provided immunity from the Prevention of Money Laundering Act, 2002?

Answer: The  offence  under  the  PMLA  arises  while  laundering  money generated from the process or activity connected with the offences specified  in  the  schedule  to  the  PMLA.  Therefore,  the  primary requirement under PMLA is commission of a scheduled offence. With the enactment of the Act, the offence of wilful attempt to evade tax under section 51 of the Act has become a scheduled offence under PMLA. However, where a declaration of an asset has been duly made under section 59 of the Act the provisions of section 51 will not be applicable  in  respect  of  that  asset.  Therefore,  PMLA  will  not  be applicable in respect of the scheduled offence of wilful attempt to evade tax under section 51 of the Act in respect of assets for which declaration is made under section 59 of the Act.

 Clarifications on Undisclosed Foreign Income and Assets

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