Black Money law: Big update on Black Money law, rules are going to change..
The Income Tax Department has formed an internal committee to review the Black Money Act (BMA), 2015, the law dealing with black money, or undisclosed foreign income and assets. This committee will study conflicts between the Income Tax Act and the BMA, taxation methods, legal issues, and problems in handling data received from abroad. The committee will focus on various tax scenarios and their legal implications, conflicts with IT regulations, law enforcement challenges, and managing the vast amount of data received from foreign countries. This committee is headed by Amal Pushp, Principal Chief Income Tax Commissioner of Uttar Pradesh (East). Additionally, a second committee, led by Chief Commissioner Jairam Raipura, will work on ways to improve the quality of tax investigations. The government is also working on introducing new disclosure schemes to increase tax collection.
The BMA, launched in 2015, was a strong government measure against corruption. Its primary purpose was to curb black money hidden in Swiss and foreign banks, tax havens, trusts, and companies whose real owners were unknown. The BMA's toughest rule is that it empowers the Income Tax Department to investigate decades-old undeclared foreign property. If such property is discovered now, it is considered income from the same year in which the department discovered it. Normal income tax laws have a 3-5 year time limit for investigating tax evasion, but the BMA has no such limit. This makes it difficult to prove the source of old property, as people often fail to maintain records that long ago.
Heavy Penalties and Punishments
Under the BMA, undeclared property can attract a 30% tax and a 90% penalty, resulting in a total liability of 120%. In contrast, the Income Tax Act allows for a maximum liability of 90%. Additionally, failing to provide details of foreign property under the BMA can result in a case being filed, even if the property was purchased with tax-paid funds. If tax liability arises under the BMA, it is considered a crime under the Prevention of Money Laundering Act (PMLA), and the Enforcement Directorate can take action.
In an ET report, law expert Ashish Mehta says that some of the BMA's strict rules, especially those questioning old property, should be reviewed. According to him, the lack of old records causes problems for taxpayers. Chartered accountant Rajesh P. Shah suggests that the government should provide relief to those who acquired foreign property legally but did not declare it after becoming tax residents in India. Some experts believe that the government should introduce a new declaration scheme, similar to the one in 2015, to allow people to declare their undeclared property. This would generate revenue for the government and provide relief to taxpayers from lawsuits. Mehta says that many people were not able to join the 2015 scheme, and now such a scheme will benefit both the government and the taxpayers.
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