A comprehensive presentation on the proposed Undsclosed Foreign Income and Assets(Imposition of taxes) Bill, 2015. The move by the government to tackle black money stashed abroad to bring back to India. Including the Jurisprudence of the Bill, scope, coverage, definitions, explanation, penalties and prosecution and impact. Guidance what to do if you have any foreign land, house or property

1. Fundmaster presents
The Undisclosed Foreign
Income and Assets Bill, 2015
By Abhishek Murali
Divya Sukumar

2. CONTENTS OF THE PRESENTATION
 Jurisprudence of the Bill (The Evolution and Why it has been proposed)
 Key Highlights of The Bill
 Scope and Definitions
 Rate of Taxes
 Assessment Proceedings
 Penalty and Prosecution under this Bill
 Compliance Scheme
 Other Laws read in concert with this Bill
 What You Need to do if you have any foreign assets
 Questions or Feedback – Contact

3. Jurisprudence of the proposed legislation
 India is going through a revolutionary decade where there has been strong
moves to bring black money into circulation
 The Honourable Finance Minister, in this pursuit, announced in his 2015 Budget
Speech that a new comprehensive law will be introduced to deal with the black
money stashed abroad
 On 20th March, 2015, the Undisclosed Foreign Income and Assets(Imposition of
Tax) Bill was introduced
 The new legislation provides for separate taxation of any undisclosed income in
relation to foreign assets under the Income Tax, guided by this new legislation

4. Key Highlights of the Bill (1/2)
 Tax, interest, penalty and prosecution for undisclosed foreign income and assets
of Resident and Ordinarily Resident
 No time limit for foreign income/assets escaping assessment
 Flat rate of tax (@30%) on any undisclosed foreign income and asset. No
exemption, deduction or set-off of carried forward losses will be allowed against
such incomes
 Severe penalty up to 3 times of the tax payable, in addition to the actual tax
payable
 Penalty of Rs.1 lakh for non-filing of return or not furnishing complete details of
foreign assets

5. Key Highlights of the Bill (2/2)
 The bill proposes enhanced type of prosecution for various violations including
rigorous imprisonment from 3 to 10 years
 One time compliance opportunity for a limited time – 30% tax and penalty of the
same amount. No prosecution.

6. Scope and Definitions (1/3)
 Applicable to Residents who are Ordinarily Residents (This term is explained in
the next slide)
 What is an Undisclosed Asset and Undisclosed Income
 Undisclosed Foreign Asset: An asset(including bank balances) located outside India
which the assessee owns and does not disclose or fails to show the source to
purchase the asset. The Fair Market Value of the asset will be considered for
taxation.
 Undisclosed Foreign Income: Any income derived from any source from outside
India by the assessee, that is not disclosed will be considered for taxation
 If the Incomes and Assets are exhaustively disclosed, then tax, penalties and
prosecution will not arise

7. Scope and Definitions (2/3)
 How to determine if you are Resident and Ordinarily Resident(check your passports)
Stayed in India for 182 days or more in the relevant year? OR
Stayed for 60 days or more in the relevant year AND 365 days or
more in the preceding previous years
Have you been a non-resident in 9 out of the 10
preceding previous years? OR
Have you during the preceding 7 years been in
India for 729 days or less?
Non Resident
yes no
Resident and Not
Ordinarily Resident
Resident and
Ordinarily Resident
yes no
This Bill is applicable only to Residents who
are Ordinarily Resident and not the others

8. Scope and Definitions (3/3)
 This Bill covers all Residents, it therefore also covers Companies(and other entities)
 In case of companies, if it is proven that the offence has been committed with the
consent or connivance or is attributable to any neglect on the part of the manager,
secretary or other officer of the company, such person will also be held guilty and liable
 There are specific provisions for making managers ( defined to include the managing
director in certain instances) of a company jointly, and severally liable for payment of any
amount due if the amount cannot be recovered from the company

9. Rate of Taxation of Foreign Income and Foreign Assets
 The undisclosed income will be taxed at a flat rate of 30% followed by penalties
as may be decided by the Assessing Officer
 The Fair Market Value of the undisclosed asset will be taxed by the Assessing
Officer at a flat rate of 30% along with penalties as he may deem to be applicable
 The flat rate of tax is independent from the penalties, which will be levied
separately
 The compliance scheme offered by the Central Government currently will not
allow free disclosure. The assessee still has to pay 30% tax and a penalty equal to
the amount of tax to be paid

10. Assessment Proceedings
 The Income Tax Authorities continue to levy taxes and administer revenues
through the Income Tax Act, however, will refer to this act with regard to any
Foreign Assets and Foreign Incomes
 Tax authorities can make any inquiry or investigation into matters of the assessee
even though there are no proceedings pending before it
 AO will serve notice on the assessee before proceeding to take any action under
this Act
 The principles of Natural Justice cannot be violated. The assessee will be given an
opportunity to be heard and to appeal to the ITAT, High Court and Supreme
Court(where substantial question of law is involved)

11. Penalty and Prosecution (1/2)
Nature Penalty Prosecution(if any)
Non Disclosure of Foreign Income or Asset 300% of the Tax Payable (Not yet determined)
Failure to disclose foreign asset or income in
the return of income
300% of the Tax Payable and
Rs.10 Lakhs
6 months – 7 years – if
default can be proved
to be wilful
If person wilfully attempts to evade any tax,
penalty or interest
3 months – 10 years
Continuing default by assessee in making
payment of tax
Amount of arrears of tax
If assessee fails to answer any question, sign
a statement he is legally bound to or fails to
produce books and supporting evidences
Rs.50,000 to Rs.2,00,000

12. Penalty and Prosecution (2/2)
Nature Penalty Prosecution(if any)
Person makes false statement or delivers
false evidences
6 months – 7 years
Abetment to make and deliver false return,
account, statement or declaration relating
to tax payable
6 months – 7 years
Subsequent offences under this act – where
a person commits the second(or more)
offence under this act
Rs.5 lakhs – Rs.1 crore 3 years – 10 years

13. Compliance Scheme – Not an Amnesty Scheme
 The Bill provides for a one time compliance scheme where the assessee can
disclose any foreign asset acquired by him/her prior to the current Assessment
Year (AY 2016-17)
 Tax will be levied at 30% and penalty equal to the same amount will be levied as
well. However, this is not an amnesty scheme as penalty will not be waived and
cannot be avoided
 There will be no additional interest u/s 234 which will be levied
 Such amount disclosed under the Compliance Scheme shall not be included in
the income of any Assessment Year under the income tax act. Hence,
assessments cannot be reopened due to disclosure under this scheme

14. Impact on Other Laws?
 The assessee will be required to file a declaration with the details of the Asset
and Incomes. This declaration will not be considered evidence for initiating
penalty proceedings under the Income Tax Act, Wealth Tax Act(now no longer in
use), or FEMA
 This will not affect any agreement that The Central Government may enter into
with any foreign countries regarding Double Taxation Avoidance Agreement,
Exchange of information or Investigation etc.

15. What you need to do if you have a foreign asset -
Fundmaster Author’s Views (1/2)
 The move to bring back Black Money from abroad was political promise and a goal of the
current Government. Once the Bill is passed in both houses(with necessary changes to
the Draft) the President will assent to the same before it becomes a Law
 This is the ideal time for all Residents who have studied abroad and have returned or
have lived abroad and have returned, to review their investments and assets(including
bank balances) that they might have outside India
 The existing Income Tax law requires foreign assets to be disclosed, however, the
proposed legislation could dole of serious punishment for negligence on the part of the
assessee
 assessees are advised to disclose any foreign assets that they may own(including part
ownership) outside India

16.  A slew of Expatriate employees now live in India and normally border on becoming a
Resident and Ordinarily Resident. These employees are advised to keep the list of their
bank accounts and other assets ready to disclose the same when the obligation arises
 Even if the Expatriate or other assessee does not have any taxable income in India, he or
she is under an obligation to disclose their assets and incomes outside India, and file
their return of income, if they are a Resident and Ordinarily Resident
 The author expects that there will be changes made to the Bill to give more clarity to
certain situations that will pose a practical difficulty in disclosure, since the Bill is still
under deliberation is a little rough around the edges. However, one must not
underestimate the impact this law will have on foreign asset disclosure
What you need to do if you have a foreign asset -
Fundmaster Author’s Views (2/2)

17. Do you have any questions? Wish to share feedback on this
presentation? Feel free to contact us
Abhishek Murali
Email: abhishekmurali@gmail.com
Mob: +91 99625 21966/ +91 97102 21966
Divya Sukumar
Email: divyasukumar.n@gmail.com
Mob: +91 98849 01199

18. THANK YOU
For more presentations and guidance on finance, funding and taxes,
checkout www.fundmaster.in
By Abhishek Murali
Email: abhishekmurali@gmail.com
Mobile: +91 99625 21966/ +91 97102 21966
Website: www.fundmaster.in