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Black Money Bill: Any non-disclosed income or asset outside India will attract 90% penalty

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By Harshmeet Singh

Moving forward on its long standing commitment of bringing back the illicit Indian money concealed abroad, the Modi Government, on Friday, finally tabled a bill in the Lok Sabha which would cover such offences. Called the ‘The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015’, it would come into effect (if passed by the Parliament) beginning from 1st April, 2016.

The official statement before the introduction of the Bill said “In order to fulfil the commitment made by the Government to the people of India through the Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015.  The Bill provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the proposed new legislation,”

Major provisions of the Bill

The Bill includes the following penalties to be levied upon Black money holders –

Any non-disclosed income or asset outside India would attract a penalty tax, which would be thrice the normal tax slab of 30%, making it 90%. Significantly, this penalty would be over and above the normal tax payable at 30%.

  • If the individual doesn’t furnish returns on his / her foreign income or asset (even if there is no taxable income), it would result in a penalty of Rs 10 lakh. However, undisclosed foreign accounts worth less than Rs 5 lakh won’t attract any penalty.
  • Apart from the hefty fines, the wilful offenders of tax evasion would also be slapped with a rigorous imprisonment for a period of 3 to 10 years.
  • If the person fails to furnish returns on the foreign assets and income held by him / her (even if there is no taxable income), it would attract a rigorous imprisonment for a period ranging from 6 months to 7 years.
  • Aiding or enticing in filing a false return or incorrect declaration would also result into a rigorous imprisonment for a period ranging from 6 months to 7 years. This clause is also applicable to the financial intermediaries and Banks who assist in such secrecy. The beneficial owners of the asset would also come under the purview of this provision.

Safeguards in the Bill

Following the principles of natural justice, as mentioned in our constitution, the proposed bill contains multiple provisions for ensuring that the accused gets enough chances to prove his / her innocence. The bill calls for obligatory issue of notices to the accused, a fair chance of being heard, providing orders in writing, acceptance of the evidence brought forth by him to prove his stand and much more. Furthermore, the accused would also have the right to appeal to the ‘Income tax appellate tribunal’, the concerned High Court and the Supreme Court, if needed.

To encourage voluntary disclosure, the bill also provides for a one time reprieve to all those who would be willing to voluntarily disclose their illicit money or assets stashed abroad. This provision is applicable only for a limited period wherein the person must disclose his / her foreign asset and file a declaration to the concerned tax authority by paying the legitimate tax and the penalty. Notably, this isn’t a pardoning clause since the person would still be slapped with the penalty in proportion to the undisclosed assets. However, the persons making voluntary disclosures won’t be prosecuted under the harsh provisions introduced in the Bill.

The bill also seeks to amend the Prevention of Money Laundering Act (PMLA) and bring ‘concealment of income and evasion of tax in relation to a foreign asset’ under its purview as a ‘predicate offence’. This move would empower the enforcement agencies to impound the foreign assets in question and begin its proceedings. The date of opening of the foreign account has also been made a mandatory disclosure under the proposed bill.

 

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More US States Lift Taxes From Female Hygiene Products

In Asia, India and Malaysia ended their tax on feminine hygiene products this year, as well.

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feminine hygiene products
Tammy Compton restocks tampons at Compton's Market, in Sacramento, Calif., June 22, 2016. Bills to exempt feminine hygiene products and diapers from sales taxes were vetoed by Gov. Jerry Brown in 2016, but the measure's author's are reintroducing the proposals. VOA

A growing number of states are moving to end a tax on feminine hygiene products seen as discriminating against women.

The issue will be on a state ballot this November for the first time, with voters in Nevada decided the matter in a referendum.

While there is no specific tax on menstrual products in any U.S. state, many states exempt people from having to pay a tax on “medically necessary” products. These products can include medicines, as well as personal care items such as ChapStick and dandruff shampoo. Women’s feminine products, including tampons and pads, have historically not been included in these exemptions.

feminine
Sanitary napkins being made from banana fibre.
Measures

With state taxes typically running between 4 and 9 percent, activists have increasingly been advocating for eliminating the so-called “tampon tax,” saying it unfairly hurts women.

“I think the issue itself has come out of the shadows. It’s really quite a no-brainer,” said Jennifer Weiss-Wolf, who has written a book on the issue, “Periods Gone Public.”

Weiss-Wolf, who also founded the organization Period Equity to eliminate sales tax on menstrual products, notes that women typically spend $70-$100 per year on such products. Many women typically menstruate between the ages of 12 to 50.

Nadya Okamoto, who named her nonprofit organization PERIOD, said the tampon tax can greatly affect low-income women.

“For some people, the few extra cents or dollars really do make a difference,” said Okamoto, whose organization provides menstrual products for those in need.

Okamoto said she became interested in accessible menstrual products when she was younger, and her family did not have a home for a time. During that time, she met homeless women who had to make their own menstrual pads.

“When you don’t have a roof over your head, the tampon tax can mean the difference between buying tampons and having to resort to using socks or cardboard, instead,” she said.

State legislation

Nine states have specifically exempted feminine hygiene products from sales tax: Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New York, and Pennsylvania. Five other states have no sales tax at all.

feminine
Plastic sanitary pads do not decompose easily.

“We still have 36 states to go,” said Weiss-Wolf, who expressed optimism the measure would be adopted by other states. “Nationally, this is a policy issue that has extraordinary support,” she said, noting that Democrats and Republicans have backed state legislation.

Last year, lawmakers in Nevada passed a bill repealing the tampon tax, with large majorities in both parties supporting the legislation. Republican Gov. Brian Sandoval signed the bill, but the issue must still be decided by voters. Nevada law requires all amendments to sales tax decisions be put to a voter referendum.

“What happens there could be inspiring,” said Weiss-Wolf, who explained that the successful passage of a referendum could create another model for activists to use in their campaign to eliminate the tampon tax.

The latest region to adopt the policy change was the District of Columbia. Mayor Muriel Bowser announced in October that the city would no longer charge sales tax on tampons, sanitary napkins, menstrual cups or comparable products.

She explained her decision in a tweet: “Because feminine hygiene is a necessity, not a luxury.” Sales tax in the District is 6 percent.

feminine
California Gov. Jerry Brown speaks at a forum in Sacramento, Calif. VOA

In some states, bills have been circulated but not passed. California Gov. Jerry Brown vetoed legislation in 2016 on the grounds that it would cost the state too much money. California’s state Board of Equalization estimated the tampon tax repeal would have cost $20 million in 2016.

Okamoto said the main argument she hears against repeal is from people who “don’t see periods as a necessity,” and who “don’t think their tax dollars should be used on periods.”

She said one model that can work for states is to introduce a tax on “something that isn’t a necessity, like alcohol, in place of menstrual hygiene products.”

International issue

The fight against the tampon tax is relatively new in the United States, with most state legislation introduced in the last few years. Activists say they were influenced by similar campaigns in other countries, including in Britain and Australia.

Also Read: Alternative Sanitary Pads Are Here, But Accessibility Still An Issue

Years of campaigning in Australia culminated in October, when federal and state governments announced they were removing a 10 percent tax on feminine hygiene products.

A campaign in Spain also scored a victory in October when the government announced that the value-added tax (VAT) on feminine hygiene products will be cut from 10 percent to 4 percent.

In Asia, India and Malaysia ended their tax on feminine hygiene products this year, as well. (VOA)