The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Taxation Act) was enacted on 26 May 2015 and has been made effective from 1 July 2015. The Black Money Taxation Act provides for separate taxation of undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act, 1961 but under the provisions of the Black Money Taxation Act.
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 along with explanatory notes was issued recently on 2 July 2015 providing the rules for valuation of foreign assets and also details about one time compliance window. (Refer to our news alert dated 7 July, 2015)
One of the important highlights of the Black Money Taxation Act is the one-time compliance opportunity to those who have undisclosed assets situated overseas. Such persons now can declare their undisclosed assets in the prescribed form with the prescribed authorities and come clean by paying 60% as tax and penalty thereon. No prosecution will be launched against them under the Black Money Taxation Act.
In order to provide clarification on several unclear aspects, especially provisions related to “one time compliance window”, the Central Board of Direct Taxes recently released a Circular containing answers to frequently asked questions (FAQs).