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THE BLACK MONEY


THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND FOREIGN ASSETS) AND IMPOSITION OF TAX ACT, 2015

 

Income-tax Act – Foreign Assets / Income

THE BLACK MONEY

THE BLACK MONEY

Obligations…

• File Return (even if below taxable) [Provisos 4 and 5 to Section 139(1)] – From Assessment year 2016-17 onwards – Applies to R & OR (Individuals / HUFs only?) – Holds (Owns?) an asset located outside India • As Beneficial Owner (Defined) • Otherwise (full owner, Trustee, Custodian?) – Has signing authority in account located outside India • Would possibly have no income from such account – Beneficiary (defined) of asset located outside India • No obligation of Beneficiary if income is includible in Total income of owner of Asset

Disclosures Required – Form 2…

• Bank Account held anytime during the year

– Where the assessee has beneficial interest – Where the assessee is the Owner

– Where the assessee is a Beneficial owner – Where the assessee is a Beneficiary

 

• Immovable property and any other capital asset held any time during the year

– Where the assessee has beneficial interest – Where the assessee is a Direct Owner

– Where the assessee is a Beneficial owner – Where the assessee is a Beneficiary

 

• Financial interest in any entity held anytime during the year

– Where the assessee has beneficial interest – Where the assessee holds Direct interest

– Where the assessee is a Beneficial owner

– Where the assessee is a Beneficiary • Trusts created under foreign laws where the assessee is a –

– Trustee

– Beneficiary

– Settlor

Accounts, bank or otherwise, held anytime during the year – where the assessee has signing authority • Any income derived from any foreign source not elsewhere specified

 

• Beneficiary Explanation 5 to Sec. 139(1)]

– Individual (? – Error of not covering Companies / Entities?)

– Derives benefit from the Asset

– During the year

– Consideration for Asset provided by Third Person • No Disclosure by beneficiary

– if no benefit derived • If Beneficiary derives benefit

– Beneficiary is aware of fact of being beneficiary

– hence, disclosure feasible (all three criterion met)

 

• Beneficial Owner [Explanation 4 to Sec. 139(1)]

– Individual (Error of not covering Companies / Entities)

– Has Provided consideration for the Asset. • directly or indirectly

– Asset held for benefit of Assessee or any other person.

 

• Benefit – Immediate or future • Benefit – Direct or Indirect 7 …Relevant Concepts… EFFECTIVELY BENEFICIAL OWNER = SETTLOR

 

…Relevant Concepts…

THE BLACK MONEY

THE BLACK MONEY

Financial interest (in an entity) (instructions to return)

• owner or holder of legal title in any financial account

• an agent, nominee, attorney or person acting in other capacity on behalf of the assessee

• a corporation where the assessee owns any shares or voting powers • a partnership where the assessee owns an interest in partnership profits or capital

• a trust where the assessee has beneficial or ownership interest • any other entity where the assessee owns any voting power, equity interest, assets or interest in profits.

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