Section 3 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
- (1)There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent. of such undisclosed income and asset: Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer.
- (2)For the purposes of this section, "value of an undisclosed asset" means the fair market value of an asset (including financial interest in any entity) determined in such manner as may be prescribed.
Summary
- This provision creates a legal requirement to charge a tax of thirty per cent on the total amount of hidden foreign income and assets.
- It specifies that this tax applies for every assessment year that starts on or after April 1, 2016.
- It establishes that a hidden foreign asset will be taxed based on its value in the specific year that the tax officer discovers it.
- It defines the value of a hidden asset as its fair market value, which is essentially the price it would fetch in an open market.
- It notes that the exact way to determine this fair market value will be set by rules created under the law.
Practical examples
FAQ
1. What is the specific tax rate for hidden foreign income under Section 3 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?
The tax rate is thirty per cent of the undisclosed income and asset value as per Section 3 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
2. When does a hidden asset get taxed if it was bought many years ago according to Section 3 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?
According to Section 3, it is charged to tax in the previous year in which the asset comes to the notice of the Assessing Officer.
3. How is the value of an undisclosed asset decided for tax purposes under Section 3 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?
Under Section 3, the value is the fair market value determined in a manner that will be prescribed by rules.
Test yourself
Q1.Under Section 3 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, what is the tax rate on undisclosed foreign wealth?
Q2.According to Section 3 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, when is an undisclosed asset outside India charged to tax?
Q3.Under Section 3 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, what does the value of an undisclosed asset mean?
Q4.For which assessment years does the tax under Section 3 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 begin to apply?