Anyone having an undisclosed bank account abroad will now have to pay tax and a penalty on the sum of deposits made since opening the account, according to the rules notified for implementation of a one-time compliance window under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
The rules also prescribe valuation norms for bullion and jewellery (including precious stones), immovable property, archaeological collections and paintings, shares (both listed and unlisted), as well as bank accounts.
The compliance window gives the account holder an opportunity to declare undisclosed assets abroad by September 30 and a further three months to pay the tax and penalty. The rate of tax will be 30 per cent, with an equal amount payable as penalty.
Once the window closes, the rate of tax will remain at 30 per cent but the penalty will be three times the tax — or 90 per cent — besides possible criminal prosecution and jail term.
For valuation of bank accounts, some safeguards have been provided to avoid double counting. It has been made clear that only fresh deposits since the date of opening will be taken into account and not the “proceed of withdrawal”. For bullion, jewellery and precious stones, the value will be higher than the cost of acquisition. It will be the price that the said article would fetch if sold in the open market on the valuation date. The assessee can get the valuation done by a recognised government agency abroad or in India.
The same principles will be followed for valuing immovable property as well as archaeological collections, drawings, paintings and sculptures or work of art.
Shares & securities
For valuing shares and securities of listed entities, the rules envisage that the fair market value will be the higher of the cost of acquisition or average of the lowest and highest price on the date of valuation. The rules also provide a formula for calculating the fair market value of unquoted equity shares and provided a methodology for calculating the interest of a person in a partnership firm, association of persons or limited liability partnership.
The Reserve Bank’s reference rate on the date of valuation will be used for converting the value of foreign assets and income into rupees. The rules also prescribe the format of notices to be sent to persons holding undisclosed assets and the format of appeals to the Commissioner (Appeals) and the Appellate Tribunal.
New rules:
1 Declaration to be sent to Commissioner of Income Tax (International Tax)-2, New Delhi
2 Assessee to be intimated by October 31 if I-T Department has any information in respect of the asset(s) declared
3 Revision of declaration permissible within 15 days of intimation sent by I-T Department
4 Tax and penalty to be paid by Dec 31, followed by acknowledgement to declarant