India's finance minister Arun Jaitley unveiled a slew of steps to battle black money stashed abroad, including a new law that will entail rigorous imprisonment of up to 10 years and a penalty of 300 per cent on its perpetrators.
Those evading tax by sending money to foreign countries will not be allowed to approach the Settlement Commission too, Jaitley told parliament while presenting his 2014-15 annual budget.
Two bills - one on illegal money stashed abroad and another to curb benami transactions within the country - are likely to be brought in the ongoing budget session of parliament, he said.
The issue of black money, unearthing which was a major election promise of the Bharatiya Janata Party, figured prominently in Jaitley's speech.
Not filing income tax returns or filing them with inadequate disclosures would lead to rigorous imprisonment up to seven years, Jaitley said, giving details of the proposed bill on money stashed abroad.
Undisclosed income from any foreign assets would be taxable at the maximum marginal rate. It also becomes mandatory to file returns vis-a-vis foreign assets. If an offence is detected, banks, financial institutions and individuals will all be liable for prosecution and penalty. Concealment of income or evasion of tax in relation to a foreign asset will become an offence under the Prevention of Money Laundering Act (PML Act), 2002, the minister said.
The Definition of 'proceeds of crime' under PMLA would be amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited. The Foreign Exchange Management Act (FEMA) would also be amended. Jaitley not only outlined the steps taken by the Narendra Modi government since it took power last year but also the steps being planned to tackle black money stashed abroad - and generated within India.
Amendments have been proposed in the Income Tax Act prohibiting acceptance or repayment of advance in cash of Rs 20,000 or more for any transaction in immovable property. Violation would invite penalties of equal amount.
It would become mandatory to quote the Permanent Account Number (PAN) for any purchase or sale exceeding Rs100,000. The minister said black money eats into the vitals of the economy and society and the problems of poverty and inequity cannot be eliminated till the problem was firmly dealt with.
"Investigation into cases of undisclosed foreign assets has been accorded the highest priority, resulting in detection of substantial amounts of unreported income," Jaitley said.
He said a new structure was being put in place including electronic filing of statements by reporting entities to ensure seamless integration of data and more effective enforcement. "Tracking down and bringing back the wealth which legitimately belongs to the country is our abiding commitment to the country," he said. Referring to the proposed bill on benami transactions, he said it would enable confiscation of benami property and provide for prosecution.
It would block a major avenue for generation and holding of black money in the form of benami property, especially in real estate.