Action to be taken against undeclared overseas assets: Tax Authorities

News:

Tax authorities will be able to initiate action against those having undeclared overseas assets even after a change in residency if these were held while being an Indian resident.

New Regulations:

• Under the Black money and Imposition of Tax Bill, 2015, which came into effect on April 1, all ‘resident’ Indians have to declare foreign assets to tax authorities.
• If the overseas asset was acquired and held as a resident and not disclosed, then action can be taken even if there is a change in residency status subsequently.
• An individual is a resident if present in India for 182 days or more during a particular year or is in the country for 60 days in the relevant financial year along with 365 days or more during the preceding four financial years whereas  a company is resident if it’s a local venture or control and management are wholly based in the country.
• Assets discovered at a later date when an assessee has changed his or her residency don’t alter his situation before the law, which is that his asset was part of his income when he was a resident and not disclosed to tax authorities.
• Although the government has given a crackdown on black money, provides for a compliance window. All those who have foreign assets can pay 30% tax and 30% penalty to avoid prosecution.
• Undisclosed foreign income or assets will face a tax of 30% plus 90% penalty besides prosecution.

Source: ET