For the well-heeled, stashing unaccounted money abroad may not be such a smart idea any longer if they want to escape the taxman’s clutches.
The Budget has outlined several legislative moves the Modi-led Government intends to undertake to deal squarely with the problem of black money.
The problems of poverty and inequality cannot be eliminated unless generation of black money and its concealment are dealt with effectively and forcefully, Finance Minister Jaitley said.
He reiterated the BJP Government’s commitment to track down and bring back the wealth that legitimately belongs to the country.
On the anvil, Jaitley said, is a comprehensive new law on black money to deal with money stashed abroad. Some of the key features of the proposed new law include amendment of the anti-money laundering law to enable attachment and confiscation of equivalent assets in India, in cases where the ones located abroad cannot be forfeited.
The offence of concealment of income or evasion of tax in relation to a foreign asset will be made a predicate offence under the Prevention of Money Laundering law. Enforcement agencies can then attach and confiscate unaccounted assets and launch prosecution against persons indulging in money laundering. Concealment of income and assets and evasion of tax on foreign assets will be prosecutable with punishment of rigorous imprisonment up to ten years.
This offence will be made non-compoundable and penalty for such concealment of income and assets at 300 per cent tax would be levied, Jaitley said. The offenders will not be permitted to approach the Settlement Commission, he said.
Jaitley also said the foreign exchange management Act (FEMA) will be amended to the effect that if any foreign exchange, foreign security or immovable property situated outside India is held in contravention of this law, action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India. Such contraventions will be liable for levy of penalty and prosecution with imprisonment up to five years, he said.
Benami Bill To curb domestic black money, Jaitley announced that a new and more comprehensive Benami Transactions (prohibition) Bill will be introduced in the current session of Parliament.
This law will enable confiscation of benami property and provide for prosecution, Jaitley said.
What experts say Daksha Baxi, Executive Director, Khaitan & Co, a law firm said, said the Finance Minister has announced the intention of specifically providing legislative capability to deal with the money stashed away outside India.
“The list of penal provisions — prosecution, rigorous imprisonment and confiscation of Indian assets — looks a bit draconian”, she said. It remains to be seen what legislation will be passed and how it will be implemented without being vindictive and whether any opportunity will be given to offenders to come clean, Baxi said.
Aseem Chawla, Partner in law firm MPC Legal, said the Budget proposal does provide a clear intent on taking some serious, harsh measures against black money, especially where monies are held outside India.
“What needs to be seen is whether the same can be effectively applied and if proper recourse can be taken by authorities once enacted in cases of stolen bank information”, Chawla told BusinessLine .