A stringent law imposing a steep 120 per cent of tax and penalty on undisclosed foreign assets and income besides criminal prosecution to deal with black money stashed abroad was passed by the Lok Sabha today.
Before the new law comes into effect, a limited period window will be provided to people to declare their till now undisclosed income and assets, pay 30 per cent tax and a similar amount as penalty and escape prosecution.
The Bill was passed by voice vote with support including from opposition, after Finance Minister Arun Jaitley dismissed apprehensions that innocent people will be harassed under the "deterrent" law saying the government does not intend to proceed against trivial violations but wont let big fish escape the net.
Piloting the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, Jaitley said there would be a short compliance window for persons having undisclosed income abroad to come clean by paying 30 per cent tax and 30 per cent penalty.
Once the compliance window closes, anyone found having undeclared overseas wealth would be required to pay 30 per cent tax, 90 per cent penalty and face criminal prosecution, he said while winding up the debate on the bill which was later approved by the House.
For those wanting to come clean, Jaitley said there would be a compliance window in two parts -- to declare assets and to pay 30 per cent tax and a similar amount of penalty.
Citing an example, he said, there could be a two-month window to declare overseas assets and income and pay tax and penalty with six months period.
The new law will help bring black money in the declared economy, improve tax collections and would eventually facilitate lowering of tax rates, he said.
"This law will act as a deterrent...It will act as a deterrent and help us in getting the assets back by people declaring them," he said, adding the law also had a provision for attachment of equivalent properties in India.
While the new law was aimed at tackling black money abroad, a new Benami bill, aimed at curbing generation of domestic black money, will soon be taken to the Cabinet for approval, Jaitley said.
