Beware! Got Black Money? Get ready to give up this whopping amount in India
Income Tax on black money in India: Have you got black money? You may end up paying a big price, if yes.
Income Tax on black money in India: Have you got black money? You may end up paying a big price, if the answer is yes. In the last few years, the law enforcement agencies have been actively in pursuit of of black money hoarders. The raids had intensified after the demonetisation decision was announced by Prime Minister Narendra Modi in November 2016, which, among others, had the aim of curbing illegal wealth accumulated by unscrupulous people..
Currently, the income tax department is targeting foreign assets as part of a new anti-black money drive. PTI had reported last month that the IT department had launched a major operation to investigate cases of illegal funds and properties stashed abroad by Indians. The report quoted sources as saying that the IT officials were working on such cases across the country and this was part of a major “concerted” action against black money.
A large number of cases are said to be involving high-profile people. Also, several high-net worth individuals are under the scanner. You may be wondering as to what happens to the black money after it is seized or declared, or how it is taxed.
Sanjay Agarwal, Partner, TASS Advisors LLP, told zeebiz.com that the penalty rate could be a whopping 60% in certain cases.
"Undisclosed income is subject to tax at the maximum marginal rate of 30%. However, there are significant penal implications which are triggered in such cases. Where search is conducted after 15 December 2016, the undisclosed income is subject to penalty at the rate of 30% of the undisclosed income of specified previous year if such assessee admits the undisclosed income, substantiates how the income was derived, pays the tax with interest thereon and furnishes the return of income for specified previous year declaring such undisclosed income therein," Agarwal said.
"Where the assessee does not admit and declares such undisclosed income, the penalty rate is enhanced to 60%," he added.
The Income Tax Department had launched Income Declaration Scheme, 2016 to provide an opportunity to people who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty - all totalling up to 45% the undisclosed income. The amount payable by the declarant under the scheme is a) Tax @ 30% of undisclosed income; b) Surcharge @ 7.5% of undisclosed income; c) Penalty @ 7.5% of undisclosed income.
The government also brought to force a new law —The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act—in 2015. The new legislation deals with cases of overseas illegal assets, which till recently were probed under the Income Tax Act, 1961. It prescribes a massive 120% tax and penalty on undisclosed foreign assets and income, including a jail term of up to 10 years.