The bill now needs to be passed by the Rajya Sabha (file photo: Reuters)
As part of the NDA government's crackdown on black money stashed overseas, the Lok Sabha passed a bill on Monday that makes hiding wealth overseas a criminal offence, attracting up to 10 years of rigorous imprisonment.
"All those who keep money outside – time is running out for them as the world is moving to an automatic information exchange and soon, when that is available, they will be penalised for their action," Union Finance Minister Arun Jaitley told parliament.
India and other G-20 members have committed to a global framework on automatic information exchange. The government will also receive information on assets held by Indian citizens in the US under FATCA.
Jaitley said that the bill would provide a 60-day compliance window for people to declare their unaccounted foreign income or assets and legalize these by paying a flat 30 percent tax and a similar penalty.
The stringent Black Money (Undisclosed Income and Foreign Assets) Imposition of New Tax Bill provides a strong deterrent for those who do not come clean. Apart from making it a criminal offence, the bill provides for the attachment of domestic property in India for those convicted under this law.
Anyone found abetting the stashing of wealth overseas, including tax advisors, financial advisors, banks and financial institutions, could also face jail terms of up to seven years.
According to the Economic Times, after the compliance window closes, undisclosed foreign income or assets would be taxed at 30 percent, along with a penalty of 90 percent. Wilful attempts to evade tax on foreign income or assets could attract rigorous imprisonment from three years to 10 years, besides a fine.
The opposition Congress party, which supported the bill, raised concerns in parliament about its potential misuse.
"As far as black money bill is concerned, we have supported it and allowed it to pass without any dissent," Congress leader Shashi Tharoor said, adding, "but in the debate we expressed some very serious concerns about some of omissions and some ways in which bill can be misused."
However, the government allayed fears that innocent people could be harassed under the proposed law. Jaitley said no action would be taken against people having Rs 5 lakh ($7,800) or less in their overseas bank accounts.
The government is reportedly also preparing a separate bill to deal with black money within India.