Finance Minister Arun Jaitley today moved in Lok Sabha a bill which provides for penalty and tax up to 120 per cent along with criminal prosecution for those who have parked black money abroad.
Piloting the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 for passage, Jaitley asked the Opposition not to develop “cold feet” in supporting the legislation.
He rejected the opposition demand of referring it to the Standing Committee saying delay in enacting the legislation would provide opportunity to offenders to transfer unaccounted overseas wealth to unknown destinations.
For those wanting to come clean, Jaitley said there would be a compliance window in two parts — to declare assets and to pay 30 per cent tax and 30 per cent penalty.
Citing an example, he said, there could be a two-month window to declare overseas assets and within six months one would have to pay tax and penalty.
Once the compliance window closes, anyone found having undeclared overseas wealth would be required to pay 30 per cent tax, 90 per cent penalty and face criminal prosecution, said Jaitley.
The Bill, which was introduced amid persistant demand for dealing effectively with black money stashed abroad, provides for rigorous imprisonment of up to 10 years for offenders.
Rejecting the opposition demand of sending the bill to Parliamentary Standing Committee for scrutiny, he said, “when we are taking steps, don’t develop cold feet. For last 11 months, you have been asking what steps are you taking. When I took steps, do walk the talk and support the bill and drop the demand of sending it to Standing Committee.”
As per the Bill, introduced in the Lok Sabha in March, the provisions would come into effect from April 1, 2016.
Jaitley said that since this is the first time that the government is imposing a tax on undisclosed foreign income, hence he has provided for a compliance window for offenders to come clean.
The duration of the window would be notified separetely once the Bill gets approval of Parliament.
Listing out reasons for not referring the Bill to the Standing Committee, Jaitley said: “Flight of unlawful assets is very quick. Merely sitting on laptop, one can transfer funds from 120-150 countries. We must take immediate steps to stop this and hence this law must be immediately passed.”
He said if the law is not passed immediately, then the government loses out on taxes in current year.
The House witnessed a lot of procedural wrangling with Deepender Hooda (Cong) saying it is a Finance Bill and is brought in as a Money Bill. He also demanded that the Bill be referred to the Standing Committee.
Speaker Sumitra Mahajan, however, overruled Hooda’s contention and said the bill is a Money Bill.
As members from AIADMK and BJD also pressed for referring it to the Standing Committee saying the contents of the bill have far-reaching implications, Mahajan said the Finance Minister had written to her on April 25 for not referring the Bill to Standing Committee.
Quoting the letter, Mahajan said the Minister had mentioned that Bill needs to be passed at the earliest so that government can take urgent action to bring back black money.
Wilful attempt to evade tax in relation to foreign income or asset will attract a rigorous imprisonment of 3 years to 10 years and a fine. Failure to furnish a return in respect of foreign assets and bank accounts or income will be punishable with rigorous imprisonment of 6 month to 7 years.
Kirit Somaiya (BJP) attacked the previous governments led by the Congress for bringing several amnesty schemes and issuing “special bearer bonds, gold bonds or voluntary deposit schemes”.
He also charged the opposition party with bringing in policies which “generated black money and help (the culprits) turn them into white”.
He said the BJP government was taking steps to bring back black money illegally stashed abroad.
P Kumar (AIADMK) supported the bill but demanded that it be referred to the parliamentary standing committee for detailed consideration.
He also took on the BJP and the Prime Minister for his election promise that Rs 15 lakh would be deposited in each bank account.
Kalyan Banerjee (TMC) asked the government to “show” any provision in the bill which empowers the government to bring back black money stashed abroad.
He also attacked the BJP for its poll promises that black money would be brought back within 100 days of the government and Rs 15 lakh would be deposited in each account.
When Banerjee said “people trusted you but you broke their trust”, BJP members shouted “Saradha, Saradha”, pointing to the ponzi scam in West Bengal.
The TMC member also said the bill was brought only to make a political point and there was “no substance” in it.
“The bill does not have any teeth to catch the culprits,” he said, adding “we will fully support you if you bring a law to prevent the generation of black money.”
B Mahtab (BJD) also sought that the bill be sent to the standing committee, saying the existing laws could have been “further refined instead of bringing a new legislation.”
Terming the measure as “very harsh and retrograde”, he said “unbridled power was being given to the agencies and care should be taken to ensure that these are not misused for political vendetta.”
Supporting the bill, Arvind Sawant (Shiv Sena) said focus should also be on political parties during election campaigns when “mostly black money is used”. He said care should also be taken to see that “the law does not become draconian”.
Jayadev Galla (TDP) accused the erstwhile UPA government of “doing nothing” to bring back moneys illegally stashed abroad.
Congress said the proposed black money law will not be effective in unearthing illegal assets and will cause harassment to tax-paying Indians living abroad even as it lent its support to the bill.
Initiating a debate on the bill, Deepender Hooda (Cong) said Congress was supporting it as his party does not wish to be accused of “standing between people and Rs 15 lakh”.
He was referring to Prime Minister Narendra Modi’s claim during the Lok Sabbha election campaign that if all the Indian money illegally stashed abroad was brought back, everybody would stand to get Rs 15 lakh, a remark later downplayed as “jumla (idiom)” by BJP President Amit Shah after the party came to power.
“Our first fear is it is not effective enough. It will cause a lot of hardships to lot many tax-paying, law-abiding, unsuspecting resident… It’s a mixed opportunity. This bill will not be fruitful,” Hooda said.
He also targeted Jaitley for his comment that black money should not be made an NDA vs UPA issue and said the ruling party is “championing” the same laws it opposed when it was in the opposition, he said, referring to GST Bill and increase of FDI in the insurance sector.
Hooda said the government had no option but to bring such a legislation after the previous UPA regime had joined a multilateral convention in 2012, making it incumbent on the country to make a law against such assets.
He warned that the legislation will give “unbridled power” to tax officials to “harass” students studying abroad and NRIs.
He suggested that many Indians living abroad may give up their citizenship as they would have to provide paper trail of all their assets on their return and any slip could subject them to severe penalty and imprisonment.
Many US citizens had given up their US passports after the government there brought in such a law, many of whose measures, he said, have found their way in the Bill.
The new Bill, he added, was a mixed package of existing Income Tax Act and the Prevention of Money Laundering Act.