New Delhi: Government on Thursday promised confidentiality of information furnished under the black money compliance window and said declarations for years for which bank statements are unavailable can be made on best estimate basis.
Issuing the second set of 27 FAQs on voluntary disclosures to be made in the 90-day compliance window ending September 30, the Finance Ministry provided a detailed methodology for computation of value of foreign properties, shares and other financial and non-financial assets.
It also detailed treatment of income of non-residents after moving back to the country and as well as applicability of Double Taxation Avoidance Agreement (DTAA) provisions.
Responding to questions on confidentiality of information disclosed under the compliance window, it said, "the information in respect of declaration made is confidential as in the case of the return of income filed by the assesses."
For periods for which bank statements of foreign accounts were unavailable, the FAQ said, "the person may compute the value (of account) of such period on best estimate basis."
The account holder, however, will have to furnish a certificate of the bank or any other evidence to the effect that the details are not available. At the same time, the government cautioned that if it was found later that the value of bank account was different from what had been declared, the immunity from higher penalties and jail term will only be to the extent of the declaration made.
For non-residents who receive pension for the period of employment in foreign country, the FAQs said the accretions to such accounts after he became residents will have to be disclosed as it will be chargeable to tax in India.
The Black money (Undisclosed Foreign Income and Assets) and Imposition of Tax provides for tax and penalty of 120 per cent and jail term of up to 10 years for holding undisclosed foreign assets. It provided a 90-day compliance window to escape the harsh punishment by declaring the assets and paying 60 per cent tax and penalty.
The Finance Ministry issued 32 Frequently Asked Questions (FAQs) on the compliance window on July 6, and came out with the second set today.
The FAQs said that for cases where undisclosed foreign property was purchased by persons using his funds in the name of spouse, the person will be treated as beneficial owner of the property. The immunity for disclosures will be available to him and his spouse.
With regard to bank accounts, it said a broad basis for computation will have to be provided by the declarant while disclosing foreign bank accounts.
The FAQs said income of non-residents for the period they were not ordinary residents of the country will be not be chargeable to tax in India. However, all their income including interest on deposits made while being non-residents, will be taxable from the date they became residents.
Similarly, pension received during the tenure of non-residency will not be chargeable to tax in India but will have to be declared and tax paid from the date of becoming resident again.
For a person receiving salary in a foreign country from an employer in India, the employer will not be deemed to be an assessee in default if the employee has declared an undisclosed asset made out of such income.
"However, the employer shall be liable for other consequences under the provisions of the Income Tax Act, such as payment of interest ... from the date on which the tax was deductible on such income up to the date of payment of tax by the declarant," it said.
Also, the FAQs said, the penalty can be imposed unless the employer proves that there was a reasonable cause for such failure. The FAQs said that it will not be mandatory to file the valuation report of the undisclosed foreign assets along with the declaration.
In case of transfer of money by a person (who has disclosed foreign assets under the window) to account of spouse or child, the beneficiaries will not be required to make separate declaration in respect of the accounts if there are no separate credits other than the money transferred. However, if the transfer of money is made for consideration of supply of goods or services, and if interest has accrued in the beneficiary accounts, separate disclosures will have to made, the FAQs said.
The Black Money Act, it added, does not provide immunity to directors of a company making disclosures in the compliance window, from offences punishable under SEBI Act or Indian Penal Code (IPC).
In case of an overseas trust, the FAQs said that declaration will have to be made by the beneficial owner of the trust if he is a resident.
The FAQs also provided for methodology for calculating the tax on securities bought using funds in undisclosed foreign bank accounts, their sales and reinvestment of proceeds.
The black money rules, it said, provides for different computational mechanism for valuing shares, mutual funds and cash holding in a bank account and so a composite valuation of brokerage accounts should not be made.
It said rental income on a property on purchase in a country with which India has a DTAA will not be chargeable to tax in India as such incomes are taxable in the host country.
For partnership firms filing declaration in respect of undisclosed foreign assets, the partners in the firm will not be liable for any offence under the Income Tax Act, Wealth Tax Act, FEMA, Companies Act and Customs Act, the FAQ said.
It said that in case money is withdrawn from one bank account and deposited in the second bank account, the value of the first bank account shall be reduced by the amount deposited in the second.
Properties acquired using partially disclosed and partially undisclosed income will have to be declared and the FAQs provided for computation of the value of the undeclared portion.
For joint foreign bank accounts, the FAQs said, all the account holders will have to made independent declarations if all have made independent contribution to the account.
However, if the contribution is made by just one account holder, declaration will have to be made by only the person. For foreign assets acquired during the pendency of an Income Tax assessment, the FAQs said, the stringent black money provisions will apply unless the assessing officer is aware of the investments made.
