Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

14th July, 2015


The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“the Act”) has been recently brought into effect with a view to curb the menace of black money held by Indian residents abroad, and provide them an opportunity to disclose the foreign income or assets within the specified window-period and ensure compliance with the Act.

The Act is applicable only to individuals/entities who have any income or assets located outside India.

The Act inter alia levies tax at the rate of 30% of the value of undisclosed foreign assets held by an Indian resident along with a penalty equal to 90% of the value of such asset, and also provides for rigorous imprisonment of 3 (three) to 10 (ten) years for wilful attempt to evade taxes in relation to any undisclosed foreign income or assets.

The declaration of foreign income or assets may be made in prescribed Form 6, to be filed with the Commissioner of Income-Tax, Delhi, or filed online on the e-filing website of the Income Tax Department using the digital signature of the declarant.

Central Board of Direct Taxes on 2nd July 2015 vide its circular has appended Explanatory Notes to Chapter VI of the Act which come into force from 1st of July, 2015. Such declaration may be made at any time before 30th September 2015 before the designated Principal Commissioner /Commissioner. The designated Principal Commissioner/Commissioner will intimate the declarant by 31st October 2015, whether any information in respect of the declared asset had been received by the Competent Authority on or before 30th June 2015.

Then the declarant shall file a revised declaration within 15 (fifteen) days of receipt of intimation in Form 6 excluding such asset. However, in all cases, the declarant is required to pay the requisite tax and penalty on the assets eligible for declaration latest by 31st December 2015 if the declarant fails to payment or where declaration is made by misrepresentation or suppression of facts or information, the declaration becomes void ab initio. After the intimation of payment by the declarant, the Principal CIT/CIT will issue an acknowledgement in Form 7 of the accepted declaration within 15 (fifteen) days of such intimation of payment by the declarant.

Effect of Valid Declaration:

  • The amount of undisclosed declared shall not be included in the total income of the declarant under the Income-Tax Act nor be chargeable to Wealth Tax for any assessment year.
  • The contents of the declaration shall not be admissible in evidence against the declarant.
  • The value of asset declared in the declaration shall not be or years.
  • Declaration of undisclosed foreign asset will not affect the finality of completed assessments.

Chapter VI of the Act provides for a window period for tax compliance to which this recent circular adds substance vide an explanation. A declaration under the aforesaid chapter can be made in respect of undisclosed foreign assets acquired from income chargeable to tax of a person who is a resident within the meaning of clause (6) of section 6 of the Income-tax Act for any assessment year prior to 2016-17.

Notwithstanding any rates specified under the Income tax Act or the annual Finance Acts, the declarant would be liable to pay tax at the rate of 30% of the value of such undisclosed asset along with a penalty at the rate of 100% of such tax. Therefore, the declarant would be liable to pay a total of 60% of the value of the undisclosed asset declared by him. The value of the asset shall be calculated as per the Rules accompanying the Act.

So hurry up, and declare any undisclosed foreign assets before 30th September 2015 or run the risk of paying penalty 120% of the value of such asset and get imprisoned upto 10 years.

*The contents hereof should not be construed as legal opinion. This provides general information existing at the time of preparation and is intended as a news update and ANB Legal neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained herein. It is recommended that professional advice be taken based on the specific facts and circumstances. The contents hereof do not substitute the need to refer to the original pronouncements.