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    A Brief About Black Money Law (Bml)

    This law applies only to Resident and Ordinarily resident of India (ROR). The objective of the law is to bring back into India, the money held abroad by Indian residents. It is applicable from 01-07-2015.

    BML applies only to foreign sourced income and assets which are liable to Indian Tax but have not been disclosed in the Income tax return filed in India.

    If the source of investment in foreign asset is explained to the satisfaction, it is not an undisclosed asset located outside India.

    Undisclosed foreign income is taxable in the relevant previous year to which it pertains and undisclosed foreign asset is taxable in the year in which comes to the notice of income tax authority.

    Undisclosed foreign income and asset (cost or FMV, on valuation whichever is higher) is taxable @30% (No surcharge and cess). No exemption, deduction will be allowed.

    Penalty @300% of amount tax will be levied for concealment of foreign income or asset. A penalty of

    Rs. 10,00,000/- will be levied for failure to furnish tax return before end of the relevant assessment year in relation to foreign income and asset.

    No penalty will be levied if foreign asset comprises of bank accounts, where in aggregate balance does not exceed Rs. 5,00,000/- at any time during the financial year. In addition to penalty, interest as per Income tax act will be levied.

    Exchange rate for converting the value in foreign currency in to Indian rupee is RBI reference rate on the date of valuation. Valuation date is 1st April of previous year in which asset comes to the notice of assessing officer.

    Voluntary Compliance:

    Any person can file a declaration at any time between 1st July, 2015 and 30th September, 2015 in form no.6 declaring undisclosed assets acquired from income chargeable to tax in India for any year prior to financial year 2015-16.

    If declaration is accepted the declarant has to pay tax @30% of value of asset and equal amount of penalty to be paid by 31st December, 2015.

    If a person uses the one time compliance window, such a person will get immunity from prosecution proceedings under specified statutes (such as the Income tax Act, 1961, Wealth Tax Act, 1957, Foreign Exchange Management Act, 1999, Companies Act, 2013, Custom Act, 1962, Prevention of Money Laundering Act, 2002)

    Key issues- Clarifications (CBDT circular)

    Where assets are acquired by a resident taxpayer out of foreign income on which taxes have been paid in a foreign jurisdiction and no taxes were paid though chargeable in India, the taxpayer will be entitled to declare such undisclosed assets under the Scheme. However, no credit for foreign taxes paid, if any, will be available to the taxpayer.

    No part of income which is not taxable in India either on account of non-resident (NR) status as per Indian Tax Laws (ITL) or as per the applicable tax treaty will be regarded as undisclosed foreign income/asset.

    • In case where declaration is made by the company/firm under the Scheme, all the directors of the company/partners of firm would enjoy immunity.
    • If taxpayer has disclosed his/her own bank account out of which transfers made to spouse/child account, then spouse/child liable to declare only accretion, if any.

    E-wallet/virtual cards are similar to bank accounts. Disclosure is required only in those cases where e-wallets and virtual cards are maintained online on a website hosted in a foreign country which was initially funded by income chargeable to tax and on which taxes has not been paid.

    Where undisclosed assets are acquired and disposed of in the past (viz., prior to 1 July 2015), the same can be declared under the Scheme since there is no requirement under the Scheme that the assets should be held on the date of declaration.

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