The Act on overseas black money (Undisclosed Foreign Income and Assets Act 2015) gives a declaring individual exemption from five important economic offence laws besides the PMLA. According to the FAQ issued by the Income Tax department, if a person uses the compliance window, he will not be prosecuted under the Prevention of Money Laundering Act (PMLA), FEMA, IT Act, Customs Act, Wealth Act and Companies Act.
Objective behind the exemption is to encourage the declaration of black income. The declaring person will not face any prosecution under these laws.
The Compliance window is the time given to the foreign income or asset holder to reveal the black income in foreign countries and pay taxes by December 31st, this year. The holder has to reveal his income within three months from July.
The compliance window’s new assertion about the exemption from punishable laws is aimed to promote declaration by black money holders in foreign countries.
Many countries have launched amnesty schemes that give an opportunity to foreign black money holders to declare their black income and convert them into white money.
The black money Act is an effort to bring back nations income parked in other counties in the context of strong global black income chasing efforts under the G20 and Global Forum for Transparency are to be launched by 2017.
Many of these black money laws in other countries have given amnesty without penalty and prosecution. For India, the 60 per cent tax rate is reasonably high as it means the black income holder may not reveal his income abroad.
But the exemption from economic offence laws will encourage the income holders. Of all the exemptions, the most important is the PMLA. The PMLA is against criminal activities and scheduled offences.
The PMLA identifies certain offences under the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, the Arms Act, the Wild Life (Protection) Act, the Immoral Traffic (Prevention) Act and the Prevention of Corruption Act, the proceeds of which would be covered under money laundering.