Immunity from FEMA for disclosures in black money window
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Also, persons not being informed of prior information with government on their assets abroad will be dealt under the Income Tax Act and not under the stringent Black Money law.
The Frequently Asked Questions (FAQs) issued by Finance Ministry said the 90-day compliance window till September 30 provided to foreign asset holders to come clean will, however, not guarantee immunity for wealth generated from corruption.
The window will not be available to those against whom notices have been issued on or before June 30, searches carried out or information received from foreign states.
The Finance Ministry said if an NRI acquires a property abroad using the income accrued or received in India without paying tax, then the asset would be treated as undisclosed foreign asset.
On foreign bank accounts, the FAQ said the taxable value would be the sum of all deposits made in the account since its opening and "not on the balance as on date".
Non-disclosure of assets even if acquired from taxed and legitimate income, will attract a penalty of Rs 10 lakh.
However, any asset acquired out of income not chargeable to tax in India will not be defined as undisclosed asset.
In a breather to students, the Finance Ministry said foreign bank accounts having less than Rs 5 lakh deposit at any time during previous year would not attract any penalty.
However, all foreign assets have to be necessarily disclosed even if their fair market value is nil.
With regard to applicability of the capital gains tax on foreign assets declared by assessee, the Ministry said that "the declarant will be liable for capital gains under the Income-Tax Act on sale of such asset in future".
The clause, tax experts say, will leave almost nothing with the assessee who would have paid 60 per cent of the fair market value of the property under the compliance window and would again pay capital gains tax when property is sold. (Business Standard)
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