The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ( 22 OF 2015) deals with the problem of resident Indians holding undisclosed foreign income and assets abroad. It is a stringent law  which  provides, inter alia, that if  a person, in certain circumstances, willfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine. It gives wide powers to the Assessing Officer to require, on receipt of information from any source, the person concerned to produce on a specified date such accounts or evidence as the Assessing Officer may require for the purpose of this Act. The Act will come into operation with effect from 01/04/2015.

2.                        Notwithstanding such wide powers vested in the Assessing  Officer and stringent punishment that can be imposed on the offending person, it is doubtful whether this law shall achieve the purpose for which it has been enacted. First, it is not a comprehensive law as the black money generated within the country does not fall within its purview and continues to have a civil liability, not a criminal liability. This is important as generation of black money within the country is at a much wider and massive scale, perhaps as much as the entire official economy. The black money generated in real estate, evasion of taxes other than income tax, electioneering and politics and Hawala networks has to be taken into account  for any anti-black money law to be effective.

3.                         Second, a person who has undisclosed foreign income  can successfully be prosecuted only if the foreign governments cooperate and furnish hard information. Leave aside the known  rogue tax havens, the  mainstream foreign banks would  part with the information only when  the names of  the individuals are provided, the names of the banks in which the black money has been deposited are indicated and evidence of criminality in  its acquisition produced. This all makes it extremely difficult to obtain the crucial information to nail the offender.

 4.                       No wonder that there has so far been  poor response to the 90-day “amnesty” window provided to those who have stashed black money abroad. The Times of India in a news  item datelined 18/08/2015 has  reported that the scheme to mop up black money stashed abroad  has got off to a slow start. Only one declaration estimated to be amounting to Rs. 70-80 Crore has been so far made as per this report. The scheme was launched on 01/07/2015 and shall close  on 30/09/2015. Even if the scheme picks up toward its fag end, it is extremely doubtful if the disclosure would be anywhere near the desired levels. The reason may also be partly because of  the scheme not being so liberal as to induce voluntary disclosure. The more lenient Scheme announced in 1997  led to mopping up of  black money amounting to around Rs. 10,000 crore was mopped up.

 5.                    Third, while the new law may not lead to any improvement in the situation, the wide powers given to the assessing Officers may be exploited by  the unscrupulous, leading to harassment and revival of “inspector raj”.



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