Cabinet clears bill to deal with black money

The Union cabinet Tuesday gave its approval to the draft of a bill that seeks to deal with the problem of undeclared assets held by Indian abroad with tough punishment and penalties including a 10-year jail term.

“The bill to deal with the problem of black money will be introduced in Parliament in this session,” finance minister Arun Jaitley had said earlier in the day, while replying to a debate on the general budget.

According to officials, the bill might be placed in Parliament before the House breaks for a month-long recess on March 20.

The government had announced its intention to bring such a bill when Jaitley had presented the budget for the next financial year on February 28.

While the proposed bill will have tough provisions to deal with assets held illegally by Indians abroad, it will also give an opportunity to defaulters to avoid jail-term by disclosing them and paying up.

Compliance window will only enable protection from prosecution but the source of income would have to be declared which would be thoroughly scrutinised.

After the expiry of ‘compliance window’ the tough provisions of the law will kick in. The proposed law will provide for imprisonment of up to 10 years for concealment of income and assets and evasion of tax in relation to foreign assets. Apart from a prison term, penalty of 300 per cent of the tax will be charged that will be close to 90 per cent of the value of the asset.

In case undeclared foreign assets of Indians come to light after the ‘compliance window’ closes, the persons will not be permitted either to confess and pay-up or to approach the Settlement Commission.

Non-filing of return or filing of return with inadequate disclosure of foreign assets will be liable for imprisonment of up to seven years. The bill also seeks to prevent creation of illegal assets by Indian abroad by empowering the government to proceed against individuals, entities, banks or financial institutions that facilitate these transactions.

Apart from this bill, the government is also planning to bring a new benami transactions (prohibition) bill in this session of Parliament to deal with the problem of untaxed money in the local economy.

It will replace a similar act that was cleared by Parliament in 1988 but could not be operationalised as rules could not be framed. The difficulty in framing the rules was because provisions of the act made it difficult to confiscate benami property.

The previous government had also made an attempt to get a new benami transactions bill passed but the process could not be completed before the tenure of previous Lok Sabha and it lapsed.