Black Money Imposition of Tax Act, 2015 - Weekly Capsule - 1

 Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Capsule 1 of 10.

Dear Friends, 

Most of us are aware or heard about the 'Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015' or simply said 'Black Money (UFIA) Act, 2015'. In case you are willing to learn the basics about the Act and to know the nuances, I am introducing summarised Capsules in 10 parts covering the key highlights of the provisions of the Black Money (UFIA) Act, 2015.

Why should You read this?

Probably you are a Professional or in a way engaged in taxation practise or merely for the sake of acquiring knowledge, it is quite interesting and amazing to know and enhance your understanding. You may never know in which walk of life it may help you. 

In case you have any suggestion, questions, or any concerns, do let me know in the comments below. I will try and address the same at the earliest.

The Black Money (UIFA) Act, 2015 is divided in 10 Capsules. 

This Act was enacted to cover black money which is stored and undisclosed by way of foreign income and Assets under the purview of Indian Tax system. The Act deals with procedure for dealing with such income and assets and to provide imposition of tax on any undisclosed foreign income and Asset held Outside India

The first Capsule as follows will cover the following provisions;

1. The Charge of Tax in the Act
2. Foreign Assets and Foreign income covered under this Act
3. Computation of undisclosed foreign income and asset to be taxable under this Act
4. Tax Authorities under this Act and the powers granted to them

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Weekly Capsule 1 of 10. You can access the bare act by clicking on link here.

1. The Charge of Tax in the Act

• The Act is applicable for AY 2016-17 and onward
• Tax is to be charged @ 30% of total undisclosed foreign assets and Income of the previous year
• The value of such foreign assets shall be decided in the previous year in which it comes to the knowledge of the Assessing Officer ('AO'). (i.e. the fair market value of an asset shall be determined by the AO)

2. Foreign Assets and Foreign income covered under this Act

• Where return of Income is filed by the Assessee and the Income from foreign source is not disclosed by the Assessee; or
• Where Income from foreign sources was required to be disclosed in return of Income and such return of Income is not filed by the Assessee.

Hence it is very important to disclose such Income from foreign sources under the return of income filed by the Assessee. 

In case of any income from foreign sources has been disclosed by the Assessee in return of income and any changes / addition is made by the AO, the same is outside the purview of this Act.

3. Computation of undisclosed foreign income and asset to be taxable under this Act

The value of  such foreign Asset / Foreign Income is to be derived as the fair market value on the first day of the financial year in which it comes to the notice of the AO. Further no deduction of any expenses / allowance / setoff of any loss is allowed to the Assessee against such income / Assets.

If the Assessee is able to prove that the Foreign Asset has been acquired from Income which is assessed or assessable to tax, the value of such Asset is to be reduced from the total undisclosed foreign income and assets of the Assessee. Such value to be derived as on the first day of the financial year in which it comes to the notice of the AO and shall be excluded proportionately to the original cost of the said Asset to the total Undisclosed Foreign Assets.

4. Tax Authorities under this Act and the powers granted to them

The Tax authorities as mentioned in the Income Tax Act, 1961,  (Sec 116) shall be the tax authorities for this Act as well. (from CBDT to the Inspector). The following powers are vested with the tax authorities while trying suit in each of the matters;

• Discovery and Inspection
• Enforcing attendance including officer of banking company
• Compelling / forcing production of books of Accounts, other documents, etc.
• Issuing Commissions (here it means instructions)
• Impound (confiscate / seize) books of account, other documents produced and retaining for such period as it thinks fit. (In case of designation below Commissioner, approval has to be obtained of the Principal chief commissioner or Chief commissioner or Principal Commissioner or Commissioner.

The above powers can be enacted by the tax authorities even if no proceedings are pending before them.