Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

Clarifications on Tax Compliance for Undisclosed Foreign Income and Assets

Income Tax - 15/2015 - Dated:- 3-9-2015 - Circular No. 15 of 2015 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division) Dated 3rd September, 2015 The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as 'the Act') has introduced a tax compliance provision under Chapter VI of the Act. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (here .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a, (exempt income) which was deposited in a foreign bank account. The person became resident in India in F.Y. 2013-14 and since then only interest is being credited to the account. Such income including interest income has not been offered to tax in India. In such case what should be the disclosure under the tax compliance? Answer: As stated the person was non-resident for the year F.Y. 2012-13 and earlier years, and the foreign income for such years was not chargeable to tax in India. For the F .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of all credits in the bank account as reduced by income not chargeable to tax in India (exempt income), which has been credited into such account. In this case, exempt income would be the foreign income deposited in the bank account upto the F.Y. 2012-13. Therefore, in effect the value of bank account in this case would be the sum of interest credits into the account since 01.04.2013. Question No.2: A person was a riots-resident froth F.Y. 1996-97 to 2010-11 during which lie was employed in a f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erson became resident in India any accretion to the pension account (in the form of interest, dividend, capital gain or any other sum) is chargeable to tax in India. Therefore, declaration of such account may be made under Chapter VI of the Act. The value of such account shall be the accretions to the account since 01.04.2011. Further, the details of such account are required to be reported in Schedule FA of the return of income and from assessment year 2016-17 onwards non-declaration of such ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

country. No taxes have been paid its India on pension received. Whether the person is required to disclose such batik account acid if yes, what should be its valuation? Answer: As stated the person was non-resident upto the F.Y. 2013-14 and the salary and pension received for services rendered outside India was not chargeable to tax in India. However, from F.Y. 2014-15 onwards, the pension received is chargeable to tax in India. In this case, the person may declare his foreign bank account under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ase, the settlor is the beneficial owner of the assets held under the trust. Therefore, declaration under Chapter VI of the Act may be made by such settlor in the capacity of a beneficial owner in respect of the assets of the trust. Alternatively, the trustee of the trust holding assets on behalf of beneficiaries may make the declaration of the assets of the trust in the capacity of a representative assessee. The trustee is eligible for declaration even where he is a non-resident. In respect of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of shares of the company is to be made as per rule 3(1)(c) and then the value of net assets of the trust shall be determined. Where the assets of the trust have been declared under Chapter VI of the Act and tax alongwith penalty has been paid, the value of the asset so declared shall not be chargeable to tax in the event of distribution of such assets to the beneficiaries. Question No.5: A person has a foreign batik account since year 2000 made out of undisclosed income chargeable to tax in Ind .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for which the statement is not available, the person may compute the value for such period on best estimate basis. However, he has to furnish a certificate of the bank or any other evidence to the effect that the details are not available with or obtainable from the bank. Further, in such case, later if it is found that the value of the bank account is different from what has been declared, the immunity under the Act shall be available only upto the extent of declaration made under Chapter VI o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Act and such declaration shall be void. Question No.6: A person was a resident in India as well as a foreign country in F.Y. 2011-12. However, after applying the provisions of the Double Taxation Avoidance Agreement (DTAA) under the tie breaker rules the person became resident of the foreign country. Whether such person needs to file a declaration under Chapter VI of the Act in respect of assets acquired/ made out of foreign income earned during F.Y. 2011-12 in which lie was non-resident in In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r VI of the Act. Question No.7: A person has a foreign bank account made out of undisclosed income chargeable to tax in India. Over a past several years, the person invested in securities which were funded from such account. Some of the securities were sold and the proceeds were deposited into the same account. Some expenditure has also been made from the bank account. What would be the declaration in such case under Chapter VI of the Act? Answer: In this case, the valuation of bank account (BA1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sfer 3000 (purchase of 100 shares of S3) 500 By clearing/ transfer 50 (interest on bonds) 550 By clearing/ transfer 7000 (sale of 500 bonds of S2) 7550 To clearing/ transfer 4000 (purchase of 400 shares of S4) 3550 By clearing/ transfer 3000 (sale of 400 shares of S4) 6550 To credit card 1000 (payment of credit card bill) 5550 To clearing/ transfer 500 (purchase from store) 5000 To clearing/ transfer 1500 (transfer to other bank account BA2) 3500 To Bank Charges 10 3490 Valuation of assets for t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of 100 shares of S3 as on valuation date i.e. 01.07.2015 Value of 400 shares of S4 Sold = (Higher of 4000 and 3000) - 3000 [amount deposited in bank account (new asset); refer rule 3(3)] = 1000 Value^ of bank account (BA1) = {10000 + 2500 + 50 + 7000 + 3000} - {4000 + 5000 + 3000 + 4.000} [acquisition of new asset; refer rule 3(3)] - 1500* [transferred to another bank account BA2 (new asset); refer rule 3(3)] = 5050 ^The reduction from the gross deposits in the bank account is available in respe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ds in the brokerage account have had multiple trades over a period of time. Further, dividend and interest has been credited to the account. Whether the brokerage account can be declared as one asset under Chapter VI of the Act or separate disclosure in respect of shares, mutual funds and cash is required to be made? Answer: The rules read with the Act provides for different computational mechanism for valuing shares, mutual funds and cash holding in a bank account. Therefore, a composite valuat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the basis of working of the value of the account or required to explain the details of entries in the account? Answer: While filing the declaration in respect of a bank account, the declarant is expected to provide a broad computation where the value of the account is different from the sum of all credits in the account. For example - if the person has purchased 50 shares over past several years out of funds in the account which is represented by debits to the account, the person is expected .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the taxation right on such rental income is exclusively with such foreign country in which the property is situated. The rentals were deposited in an undisclosed foreign bank account. For the purpose of declaration under Chapter VI of the Act, will the value of the bank account include such rental income deposited in the account? Answer: If the DTAA entered with any country provides that the rental income 'shall' be taxed only in the country in which the property is situated, then the t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dia in the name of his spouse. The funds for acquisition of the property were provided by such person. In this case, whether the person can make a declaration under Chapter VI of the Act in his own name? Answer: In this case, the person is treated as a beneficial owner of the property and he may file a declaration of the undisclosed asset in his name, being a beneficial owner. The immunity in respect of the asset declared shall be available to both the person and his spouse. Question No.12: Wher .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g to A.Y. 2013-14. The assessment order for A.Y. 2013-14 has been passed on 10th August, 2015 in which such undisclosed foreign asset was not examined and consequently went untaxed. Can a declaration of such asset be made under Chapter VI of the Act ? Answer: Yes, declaration of such undisclosed foreign asset can be made under the Chapter VI of the Act Question No.14: Will the declarations made under Chapter VI of the Act be kept confidential? Answer: The Act incorporates the provisions of secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alary deposited in the account, will the employer be liable for consequences under the Income-tax Act for non-deduction of tax at source on the salary paid by the employee? Answer: Where the employee has declared an undisclosed asset made out of income received from his employer, the employer shall not be deemed to be an assessee in default under section 201(1) of the Income-tax Act for non-deduction of TDS on such income. However, the employer shall be liable for other consequences under the pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ade out of income chargeable to tax in India. From such account he has transferred money to his spouse's/child's (say, B) account from time to time. There are no independent credits into the spouse's account except for such transfers. Whether in this case both the person and the spouse need to declare the undisclosed foreign bank account under Chapter VI of the Act? Answer: In a case where there is only transfer of money from the account of the individual to his spouse or child and t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the spouse/child. Besides, any accretion to the account of the spouse/child in the nature of interest etc. may also be required to be declared by the spouse/child. Question No.17: In respect of undisclosed foreign asset declared under Chapter VI of the Act, is it mandatory to include such asset in the books of account of the person? Answer: It is expected/ required that the declarant will show the asset so declared in his books of accounts and if he is not required to maintain books of account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ver withdrawal used for funding cost of investment where proceeds are subsequently deposited on sale of investments? Answer: The proviso to rule 3(1)(e) in respect of valuation of bank account covers only amount withdrawn in cash and redeposited into the same bank account. In case amount is transferred from first bank account and deposited into second bank account then provisions of rule 3(3) shall apply and the value of first bank account shall be reduced by the amount deposited in the second b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

declaration on the departmental website a facility for uploading the documents is available. Question No. 20: If a query has been sent by the competent authority in respect of a foreign asset of a person to a Government of any country or territory outside India but no information has been received upto 30.06.2015 can such asset be declared under Chapter VI of the Act? Answer: Such asset shall not be hit by section 71(d)(iii) of the Act and can be declared if other provisions contained in section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

osted in a foreign country which was initially funded by income chargeable to tax in India on which tax has not been paid. The person plays online games/poker through the fiends lying in the e-wallet/virtual card and has earned some money which was credited to the e-wallet/virtual card account. Can a declaration be made in respect of e-wallet/virtual card? If yes, what shall be the valuation of the e-wallet/virtual card? Answer: The e-wallet/virtual card account is similar to a bank account wher .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shable under the SEBI Act/Regulations or under IPC. Question No. 24 : A person acquired an immovable property in a foreign country for USD 50,000 out of which investment of USD 10,000 was made out of his own undisclosed income chargeable to tax in India and balance USD 40,000 was made out of loan acquired from a bank. The fair market value of the property as on 01-07-2015 is USD 100,000. Whether the property can be declared under Chapter VI of the Act and if yes, what would be the value of decla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under section 5(2): USD(100,000 x 40,000 / 50,000)=USD 80,000 Value of the undisclosed asset to be declared under Chapter VI : USD (100,000 80,000) = USD 20,000 Since the declaration is in respect of 20% of the value of the property, the declarant shall be issued an acknowledgement in Form 7 only in respect of such portion of the immovable property. Further, in such case it may be ensured that the mortgage payments to the bank have not been/are not being paid out of undisclosed income chargeabl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tributed only by A the disclosure is to be made by A. However, where the funds have been contributed by both A and B independently, the declaration is to be made by both A and B in respect of the funds contributed by them into the bank account. Question No.26: As per answer to question no. 23 of Circular No. 13 dated 06-07-2015, a person being a non-resident can file a declaration under Chapter VI of the Act in respect of asset acquired out of income chargeable to tax earned when he was resident .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o tax in India earned when he was a resident. Answer to question no. 23 of Circular No. 13 dated 06-07-2015 says that a person may make a declaration under section 59 of the Act in respect of an undisclosed foreign asset acquired by him in the year in which he was resident in India. Thus a specific situation has been dealt in answer to question no. 23 of Circular No. 13 dated 06-07-2015 which answers the query clearly. Question No. 27: A person acquired an immovable house property in the year 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uisition of such asset in the assessment proceedings and the same shall be assessable under the provisions of the Income-tax Act. Whether the provisions of section 72(c) of the Act will apply in this case and the Assessing Officer may proceed to assess the undisclosed asset under the Act? Answer: Section 72(c) is applicable where any undisclosed foreign asset has been acquired prior to commencement of the Act and no declaration in respect of such asset has been made. In such case the same shall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version