The document summarizes key aspects of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. It outlines a compliance window mechanism that allows declaration of undisclosed foreign assets within 3 months to pay tax at 30% of the value, plus a penalty of 100% of the tax amount. Rules for valuation of various assets like bullion, property, and shares are also described. The overview notes that those with undisclosed foreign bank accounts must now pay tax on deposits in the account since it was opened.

1. BLACK MONEY (UNDISCLOSED
FOREIGN INCOME AND ASSETS)
AND IMPOSITION OF TAX ACT,
2015
CA MEHUL SHAH
(PARTNER )
RASESH SHAH AND ASSOCIATES
mehul@raseshca.com

2. Introduction
 THE BLACK MONEY (UNDISCLOSED FOREIGN
INCOME AND ASSETS) AND IMPOSITION OF TAX
ACT, 2015 (referred to here as 'the Act') as passed by
the Parliament has received the assent of the President
on the 26th of May 2015.
 The Act contains provisions to deal with the menace of
black money stashed away abroad.

3. (…cont)Introduction
 It levies tax on undisclosed assets held abroad by a
person who is a resident in India at the rate of 30
percent of the value of such assets, provides for a
penalty equal to 90 percent of the value of such asset,
and also provides for rigorous imprisonment of three to
ten years for willful attempt to evade tax in relation to a
undisclosed foreign income or asset.

4. COMPLIANCE
WINDOW MECHANISM

5. Compliance Window mechanism
open for 3 months
 A declaration can be made
 by a person who is a resident other than not ordinarily resident in
India within the meaning of clause (6) of section 6 of the IT Act
 in respect of undisclosed foreign assets
 acquired from income chargeable to tax under the IT Act
 for any A.Y. prior to the A.Y. 2016-17

6. Compliance Window mechanism
open for 3 months
 (……cont ) A declaration can be made
 ……for which he had,
 either failed to furnish a return under section 139 of the IT Act
 or failed to disclose such income in a return furnished before
the date of commencement of the Act
 or such income had escaped assessment by reason of the
omission or failure on the part of such person to make a return
under the IT Act or to disclose fully and truly all material facts
necessary for the assessment or otherwise

7. BENEFITS OF
DECLARATION

8. Benefits of making declaration
through Compliance Window
 The person making a declaration under the provisions of the chapter would be liable to
pay tax at the rate of
 30 percent of the value of such undisclosed asset
 also be liable to pay penalty at the rate of 100% of such tax (i.e., a further 30% of
the value of the asset as on the date of commencement of the Act).
Thus, in a nutshell the declarant would be liable to pay a total of 60 percent
of the value of the undisclosed asset declared by him.
 This special rate of tax and penalty specified in the compliance provisions will override
any rate or rates specified under the provisions of the Income-tax Act or the annual
Finance Acts.
 Hence no interest would be chargeable or in other words, interest shall be deemed to
be included in the above rate of 60 %

9. TIME LIMITS OF
DECLARATION AND
MAKING PAYMENT

10. Due dates to avail the benefit of
declaration and making payment
 Can be made anytime on or after the date of commencement of the
Act but before a date to be notified by the Central Government.
 Section 1 provides that the Act shall come into force on the 1st of
April, 2016. However, section 3 which specifies the charge of tax,
lays down that tax shall be charged for every assessment year
commencing on or after the 1st day of April, 2016.
 Hence, under the Act, tax is also chargeable for assessment year
2016-17 for which the relevant previous year is 2015-16.

11. Due dates to avail the benefit of
declaration and making payment
 In exercise of its power to remove difficulties
under section 86 of the Act, the Central
Government by an order has clarified that the
Act shall come in to force on 1st July, 2015.
Accordingly, the compliance provisions under
Chapter VI shall also come into force with
effect from the date of commencement of the
Act i.e. 1st of July, 2015.

12. Time limits for declaration and
making payment
 The CG has notified
 30th September, 2015 as
the last date for making
the declaration before
the designated Principal
Commissioner or
Commissioner of Income
Tax (PCIT/CIT)
 31st December, 2015 as
the last date by which
the tax and penalty shall
be paid.

13. Circumstances where
declaration shall be invalid
 If the declarant fails to pay the entire amount of tax and penalty
within the specified date, i.e., 31-12-2015
 Where the declaration has been made by misrepresentation or
suppression of facts or information
 Where the declaration is held to be void for any of the above
reasons, it shall be deemed never to have been made and all the
provisions of the Act, including penalties and prosecutions, shall
apply accordingly.
 Any tax or penalty paid in pursuance of the declaration shall,
however, not be refundable under any circumstances.

14. VALUATION OF VARIOUS
ASSETS

15. RULES PRESCRIBING
VALUATION
 The rules also prescribe valuation norms for bullion and jewellery
(including precious stones), immovable property, archaeological
collections and paintings, shares (both listed and unlisted), as well
as bank accounts.
 For valuation of bank accounts - Some safeguards have been provided
to avoid double counting. It has been made clear that only fresh
deposits since the date of opening will be taken into account and not the
“proceed of withdrawal”.
 For bullion, jewellery and precious stones - The value will be higher than
the cost of acquisition. It will be the price that the said article would fetch
if sold in the open market on the valuation date. The assessee can get
the valuation done by a recognised government agency abroad or in

16. (…CONT) RULES PRESCRIBING
VALUATION
 For valuing immovable property as well as archaeological collections, drawings,
paintings and sculptures or work of art- The same principles will be followed as
described
 For valuing shares and securities of listed entities- the rules envisage that the fair
market value will be the higher of the cost of acquisition or average of the lowest
and highest price on the date of valuation. The rules also provide a formula for
calculating the fair market value of unquoted equity shares and provided a
methodology for calculating the interest of a person in a partnership firm,
association of persons or limited liability partnership.
 The Reserve Bank’s reference rate on the date of valuation will be used for
converting the value of foreign assets and income into rupees.

17. OVERVIEW OF THE NEW ACT
 Anyone having an undisclosed bank account abroad will now have to pay
tax and a penalty on the sum of deposits made since opening the account,
according to the rules notified for implementation of a one-time compliance
window under the Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015.
 The compliance window gives the account holder an opportunity to declare
undisclosed assets abroad by September 30 and a further three months to
pay the tax and penalty. The rate of tax will be 30 per cent, with an equal
amount payable as penalty.
 Once the window closes, the rate of tax will remain at 30 per cent but the
penalty will be three times the tax — or 90 per cent — besides possible
criminal prosecution and jail term.

18. ABOUT THE AUTHOR
Author, Mr. Mehul Rasesh Shah is a member of the ICAI. He
has pursued certificate Course in International Taxation in the
year 2012 conducted by the ICAI. He has also completed his
Diploma in IFRS (ACCA, London) and Advanced Diploma in
Management Accounting (CIMA, London) in the year 2013.
Currently he is handling many Appellate proceedings
including representation before the Tribunal and Settlement
Commission. He can be reached at mehul@raseshca.com

19. Contact US
19
CA Mehul Shah
Mobile : 9723459572
E-mail : mehul@raseshca.com
Partner
Rasesh Shah and Associates