After SC verdict on Benami law, experts weigh in on the Black Money law
After the Supreme Court of India’s (SC) ruling quashing the retrospectivity of the Benami Law, experts are now interested in knowing if it will hold true in the case of the Black Money Act or not. The act penalises the concealment of foreign income and imposes criminal liability for attempting to do so.
The law, passed in 2015, mandated a 30 per cent tax on undisclosed foreign assets or income for the previous assessment year. No deductions or exemptions were allowed in the law. It came into effect on April 1, 2016.
The law also provided a one-time disclosure opportunity for the person with undisclosed foreign income. They were permitted to file a declaration and pay a penalty of 100 per cent. It was passed to overcome the limitations of the Income Tax Act.
The law, however, allows retrospective use, according to a report by Economic Times (ET). The law was introduced primarily to target the money lying in Swiss bank accounts. The clause of retrospectively was added because the accounts may have been opened years ago.
“It’s this deliberate attempt to use the law retrospectively that adds to the severity of the Black Money Act,” the report added.
Under the law, the year in which the tax department gets hold of the information is the year in which the foreign asset is deemed to have been acquired.
This clause makes the law particularly severe. The report stated that it set a ‘chase’ among the tax authorities to meet the ‘stiff tax mobilisation targets’.