8 things you must know about the Undisclosed Foreign Income & Assets Bill, 2015

The Undisclosed Foreign Income & Assets (Imposition of Tax) Bill, 2015 has been passed in both the houses and the bill now awaits the President’s assent to become a law.

Here are the highlights of this bill –

  • The bill proposes that starting financial year 2015-16 undisclosed foreign income & assets will be taxed under this new bill. Such income & assets will no longer be covered under the existing Income Tax Act, 1961.
  • The new bill only applies to the Residents of India (including their legal heirs).
  • A flat tax rate of 30% shall be charged on undisclosed foreign income and asset. A penalty of 90% of the undisclosed income will also be charged.
  • No exemptions, deductions or set off of any carried forward losses (as provided under the IT Act) would apply to such income & assets.
  • A penalty of Rs 10lakhs may be charged for failure to include details of foreign assets or income or in the income tax return or if inaccurate details have been furnished.
  • Evasion of these taxes may also result in imprisonment from 3 years to 10 years. Cases where return has been filed but the tax payer failed to disclose foreign assets will also be punishable with imprisonment of 6 months to 7 years.
  • Since this bill is applicable to Residents – there is no exemption for expatriates who may become residents by virtue of their extended stay – so they much watch out for compliance with this bill.
  • The bill after receiving President’s assent will offer a window of one time compliance – where tax payers can disclose such foreign income & assets. During this window, a 30% tax (mentioned above) and a 30% penalty shall be charged instead of the 90% penalty. This window will be announced shortly.

If you have any questions around your foreign income and its taxability or disclosure with respect to your foreign assets – reach out to us support@cleartax.in and our CAs will assist you.

4 Responses to 8 things you must know about the Undisclosed Foreign Income & Assets Bill, 2015

  1. Saxena May 16, 2015 at 6:17 pm #

    Hi ClearTax team,
    I need your advice on one of my tax issues.
    I worked in UK between October 6, 2008 to April 10, 2009 as part of overseas assignment from My IT Company.
    I have filled tax return in India for AY2009-10 for period of October 4, 2008 to March 31, 2009 showing both UK and India incomes for the year.
    For the 10 days period i.e. from 1 April to 9 April,2009, I missed to show UK income for that year while filing return in India in 2010-11 AY.
    Please advise how to deal in such situation. I am very worried after hearing about new taxation law.
    UK income during that period is very nominal 50K in rupees approx, but i had 5L+ rupees in my UK account in 2009,mostly earned in 2008-09 FY times.

    Thanks
    Saxena

    • cleartax-team May 16, 2015 at 8:45 pm #

      You will hear back from one of our experts on your email address.

  2. Sheila Murthy May 16, 2015 at 8:49 pm #

    Hello Clear Tax Team

    Effective FY 2015 -16 , foreign assets need to be reported as per your circular . As I am a NRI , this may not be necessary , however when I do return to a resident status , do I have to repatriate such assets back to india or can it just stay in foreign land .Please clarify .

    Thanks
    Sheila Murthy

    • cleartax-team May 19, 2015 at 3:53 pm #

      We have sent your query to our experts and you will hear back on your email from us.