F. No. 142/18/2015-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division)
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Circular No. 15 of 2015 Dated 3rd September, 2015
Clarifications on Tax Compliance for Undisclosed Foreign Income and Assets
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 (hereinafter referred to as 'the Rules') have been notified. In this regard, circular No. 13 of 2015 dated 6th July, 2015 issued by the Board provided clarifications to 32 queries. Subsequently, further queries have been received from the public about the tax compliance provisions under Chapter VI of the Act. The Board has considered the same and the following clarifications are issued.-
Question No.1:
A person, while being a non-resident, earned foreign income, not chargeable to tax in India, (exempt income) which was deposited in a foreign bank account. The person became resident in India in E. 2113-14 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.Y. 2013-14 and subsequent years, while he is resident in India, the person's global income is taxable in India. Accordingly, the declaration of foreign bank account in this case, which has been made partially out of undisclosed income chargeable to tax, may be made. In this case, the value of undisclosed foreign bank account shall be computed as per rule 3(1)(e) of the Rules and a deduction as per section 5 of the Act shall be allowable. Therefore, the value of such account shall be the sum 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 FY 2012-13. Therefore, in effect the value of bank account in this case would be in sum of interest credits into the accounts since 01.04.2013.
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.Y. 2013-14 and subsequent years, while he is resident in India, the person's global income is taxable in India. Accordingly, the declaration of foreign bank account in this case, which has been made partially out of undisclosed income chargeable to tax, may be made. In this case, the value of undisclosed foreign bank account shall be computed as per rule 3(1)(e) of the Rules and a deduction as per section 5 of the Act shall be allowable. Therefore, the value of such account shall be the sum 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 FY 2012-13. Therefore, in effect the value of bank account in this case would be in sum of interest credits into the accounts since 01.04.2013.
See all FAQs on tax compliance on undisclosed foreign assets and income.
