Under a new law approved by the Parliament of India on May 13th, Indian residents with undeclared assets in foreign bank accounts could be hit with penalties, taxes, and even prison time. However, the law does give these taxpayers a limited window of time during which they can disclose their foreign assets, avoid prosecution, and pay a 30% tax and 30% penalty.
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, applies to residents of India who own assets in foreign accounts worth more than INR 500,000 (about $8,000). The law imposes a 30% tax, a 90% penalty, and up to ten years’ imprisonment on Indian residents who fail to disclose their foreign assets.
The law takes effect April 1st 2016. While the law provides a voluntary compliance window, it does not specify how long that window will remain open; its length will be prescribed by regulations, according to India’s finance minister, Arun Jaitley, in a May 13th speech to the upper house of the Indian Parliament.
The law’s Statement of Objects and Reasons states that the government of India is “strongly committed to the task of tracking down and bringing back undisclosed foreign assets and income which legitimately belong to the nation.” In a tweet, the prime minister of India, Narendra Modi, hailed the passage of the bill as an “historic milestone. Personally, I am very delighted. It indicates the priority we attach to the issue.”
—Alistair Nevius (firstname.lastname@example.org) is editor-in-chief, tax for CGMA Magazine.