Income Tax Act Current Affairs
The Union Finance Ministry has constituted task force to review Income Tax (IT) Act 1961 and draft new direct tax law in consonance with current economic needs. CBDT member Arbind Modi will be convener of task force. Chief Economic Adviser Dr. Arvind Subramanian will be its permanent Special Invitee.
Terms of Reference of Task Force
Taskforce main mandate is to draft appropriate Direct Tax Legislation keeping in view direct tax system prevalent in various countries, international best practices. It will also take into consideration, economic needs of country and any other matter connected thereto.
During 2017 Rajaswa Gyan Sangam held in September, 2017, Prime Minister Narendra Modi had observed that IT Act, 1961 was drafted more than 50 years ago and it needs to be re-drafted. Rajaswa Gyan Sangam is an annual conference of senior tax administrators to enable two-way communication between policy-makers and senior officers in field offices with view to increase revenue collection and facilitate effective implementation of law and policies in key result areas.
Lok Sabha on 11 May 2015 passed Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 by a voice vote.
The bill seeks to deal with the menace of black money and to replace the Income Tax (IT) Act, 1961 for the taxation of foreign income.
Salient features of the Bill
Scope- Provisions will applicable to both undisclosed foreign income and assets including financial interest in any entity and the Act will be applicable to all persons resident in India.
Rate of tax– A flat rate of 30 percent tax will be applied to undisclosed foreign income or assets. In case of any carried forward losses, no exemption or deduction or set off will be allowed which may be admissible under the existing IT Act, 1961.
Penalties- Violation will entail stringent penalties. Following are penalties mentioned
- For nondisclosure of foreign income or assets outside India, penalty will be equal to three times the amount of tax payable i.e. 90 percent of the undisclosed income in addition to tax payable at 30%.
- In case of failure to furnish return in respect to foreign income or assets, there will be of 10 lakh rupees.
Prosecutions- For various types of violations, the bill proposes enhanced punishment. They are
- For willful attempt to evade tax, the punishment will be rigorous imprisonment from 3years to 10 years and a fine.
- In case of failure to furnish a return of foreign assets the punishment will be rigorous imprisonment of 6 months to 7 years with fine.
One-time compliance opportunity
- It also adds provision of one-time compliance opportunity to persons for limited period who have undisclosed foreign assets that has not been disclosed for the purposes of Income-tax.
- In this case, such persons will be permitted to file a declaration before a tax authority, and pay a penalty at the rate of 100%.
In order to include offence of tax evasion as a scheduled offence under Prevention of Money Laundering Act (PMLA), 2002, the bill proposes amendment to PMLA, 2002.