With an aim to nab black money stashed abroad, the government has amended the Foreign Exchange Management Act (FEMA), strengthening punishments for violators.
The amended FEMA allows for confiscation of domestic property of offenders and imposes a punishment of up to five years for the defaulters.
Finance Minister Arun Jaitley made the changes to this effect in the Finance Bill, 2015 passed by Lok Sabha yesterday.
Jaitley said the new law is to deal with the black money issue stashed abroad and not to harass anyone.
The Bill will now be taken up by the Rajya Sabha.
The new clause inserted in FEMA, says that a person having assets abroad in contravention of law will be liable to a penalty up to three times the sum involved. There is also a stipulation which states that in addition to the penalty, the offence will be “punishable with imprisonment for a term which extends to five years with fine”.
Further more, the new provision also says Enforcement Directorate can authorise prosecution of the offenders after recording reasons in writing.
A few days ago, the government had introduced a stringent Bill in the Lok Sabha to deal with the menace of black money stashed abroad.
Besides other things, the law provides for imprisonment of up to ten years for hiding foreign assets.
In order to fast-track the recovery of black money, the Bill proposes a one-time compliance opportunity for all those who have stashed black money abroad.
With the fussy mania of Bitcoin going around and past, your eyes and ears, in the news and peer discussions, you must be having some basic questions about it: What is bitcoin? Is it legal? How can I get it? But most of all, you must be thinking, ‘Is investing in Bitcoin safe?’
Bitcoin is the first ever cryptocurrency that existed, it was invented in 2009 by Satoshi Nakamoto.
Cryptocurrencies are nothing but computer codes that have monetary value. No Government has any control over them.
Bitcoins ‘self-contain’ their value i.e. there’s no need for any bank to move or store the money.
Bitcoin currency is completely unregulated and decentralized.
Bitcoins are mined, and they can be mined by anyone in the general public who has a strong computer. However, only 21 billion of bitcoins in total can be mined. Currently, there are around 11 million in circulation.
Bitcoin has no underlying physical monetary base to support its value, and it is totally subject to its demand in the market.
What are the risks?
Low demand: India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently, the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall.
Unregulated: There is no bank or government tax agency that can track your money and its movement. Hence, it can become a tool for money laundering.
Irreversible transactions: There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever.
Finance minister Arun Jaitley highlighted in a statement that cryptocurrencies are not legal tender and have no regulatory permission or protection in the country.
However, there was no announcement banning or imposing any curbs on the same. The government panel is also awaiting a report on tackling cryptocurrencies in India, Jaitley said.
The government has recently cautioned investors to be wary of virtual currencies like bitcoin, saying they are like Ponzi schemes with no legal tender and protection.
“One of the features of cryptocurrency is that there is lack of dependence on the state. It functions with a degree of anonymity. It operates within a virtual community which is created and enjoys the trust of that virtual community,” Finance Minister Arun Jaitley told the Rajya Sabha.
“The government is examining the matter. A Committee under the chairmanship of the Economic Affairs Department Secretary is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken… Instead of taking any knee-jerk action, let’s wait for the report of this committee.” Jaitley added