Having advanced enforcement of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act by eight months through an executive order, the Union government on Thursday also notified the rules under the Act.
In exercise of its power to remove difficulties in interpreting the expression “date of commencement of the Act” and giving effect to two of its crucial provisions, the government issued an order clarifying that the Act has come into force on July 1, 2015.However, many legal experts are of the opinion that when the date of commencement is clearly notified in the Act, it cannot be changed through an administrative order.
“Section 86 (1) of the Act empowers the Central government to order to remove difficulties not inconsistent with the provisions of the main Act as a delegate of Parliament. But in the instant situation, the government has actually amended Section 1(3) of the main Act by altering the date when the Act shall come into force from April 1, 2016, to July 1, 2015,” said former Additional Solicitor General Bishwajit Bhattacharyya.
He said this is patently illegal as ‘otherwise’ has not been provided in the Act. “A delegated legislation cannot amend the parent legislation. Parliament alone could have altered the date of coming into force of the Act,” he said.
Section 1(3) states: “Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 2016” and Section 86(1) provides that “if any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty”.
Senior advocate and Member of Parliament K.T.S. Tulsi said: “As of date the administrative order is unconstitutional. If the date is mentioned in the statute, the government can change the date of implementation only through an amendment by the Parliament. An administrative order cannot violate the intention of the Parliament.”
Salient features of rules notified by the Central Board Of Direct Taxation for calculating overseas income and assets under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015:
|1||Value of the overseas assets, including immovable property, jewellery and precious stones, archaeological collections and paintings, shares and securities and shares in unlisted firms abroad will be calculated at the fair market value.|
|2||Value of an overseas bank account will be the sum of all deposits made in the account since its opening.|
|3||A total of tax and penalty of 120 per cent will be levied on the income or assets held abroad after the expiry of a one-time 90-day “compliance window” that expires on September 30, 2015.|
|4||Any income or asset declared during the “compliance window” would attract a total of 60 per cent tax and penalty, without penal provisions like jail term. They will have time till December 31 to pay the levies.|
|5||Fair market value of an immovable property will be higher from the acquisition cost or the price that the property shall fetch in open market on the date of valuation.|
|6||Same principle would also be applicable for valuing bullion, jewellery or precious stone as well as archaeological collections, drawings, paintings and sculptures or work of art.|
|7||For valuing shares and securities of listed entities, the fair market value will be the higher of the cost of acquisition or average of the lowest and highest price on the date of valuation.|
|8||Seven forms including those which have to be filled by persons while declaring the undisclosed assets outside the country have been prescribed along with format of notices to be send to the persons holding undisclosed assets. Also the format for appeals to Commissioner (Appeals) and Appellate Tribunal have been provided.|
|9||Holders of assets will have to disclose details of the location of bank accounts, date of opening and sum of all credits in the prescribed format. Holders will have to make disclosures with regard to immovable property, artistic works, securities held or any other assets along with their fair market value. With regard to jewellery, disclosures have to be made about the purity, quantum and value of gold, diamond and other precious metals.|
|10||RBI reference rate on the date of valuation should be used for converting the value of foreign assets and income into Indian rupee.|