Bills and Acts Pertaining to Black Money | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

Introduction

 Undisclosed Foreign Income and Assets (Imposition of Tax) Bill

• Finance Minister Mr. Arun Jaitley introduced the bill in Lok Sabha on March 20, 2015
• Passed by both Lok Sabha and Rajya Sabha Income Tax (IT) Act, 1961 replaced to tax foreign income Applies to all Indian residents
• Tax evasion and hiding foreign income to be treated as Criminal cases
• Punishment will be 3 to 10 years imprisonment with a fine amount for willful tax evasion
• Fine imposed will be three times the tax on undisclosed amount with a 30 percent addition
• Failure to pay tax returns on foreign assets leads to imprisonment from 6 months to 7 years with a fine
• Fine will be 10 lac for not paying tax on foreign income
• No fine for assets or income worth 5 lacs or less

Prevention of Money Laundering Act, 2002

Some of the salient features of the act include

• Act introduced in Lok Sabha by then Finance Minister Mr. Pranab Mukherjee
• Bill amendment made on 2011 to include India as one of the key members of Financial Action Task Force (FATF)
• Act provides provisions of Indian laws to comply with international laws regarding money laundering
• Concealment, possession and acquisition of foreign assets without paying tax are defined as offence in this law
• Fine up to 5 lacs
• Individual property confiscation for a period not extending up to 180 days if proven offensive
• Financial Action Task Force (FATF)
• Inter governmental body with its origin in Paris G-7 Summit, 1989
• Main purpose is to set standards globally on anti money laundering
• Combating the financing of terrorist activities or terror financing
• India joined FATF in 2010 as 34^th member nation
• Anti money laundering conventions
• Countering measures on terror financing with cooperation of nations

Negotiable Instruments Bill

• Negotiable instruments Act was introduced in 1882
• The Act was amended on 13^th May 2015
• Passed in the Lok Sabha
• Explanation of promissory notes, cheque and bills of exchange amended with digital signature
• Main aim is to create penalties for bouncing of cheques
• Bounced Cheque issuer will be penalized by withdrawing a penalty amount from their bank accounts and also will have to pay penalty on the receiver end
• In case of more than one instance of bouncing cheques, cases will be transferred to the appropriate courts coming under the jurisdiction
• Bill withdrawn on 24^th July to make further instruments
• Foreign Exchange Management Act (FEMA), 1999
• All foreign exchange related transactions regulated by FEMA in India
• FEMA replaced strict and restrictive control provisions of FERA, 1973
• Ensure proper utilization of foreign transactions
• Conserve the Forex transactions
• Violation implies civil imprisonment if fine not paid within 90 days
• RBI administers FEMA implementation
• Act allows only authorized persons to deal in foreign exchange
• Objectives of the act include external trade facilitation, promotion of foreign exchange and payments
• RBI monitors business conduct of Indian companies outside India
• Recently, Indian companies established abroad especially in Tax havens were taxed by RBI
• All imports and export related transactions come under the purview of this act
• Functions as a watch dog mechanism in foreign exchange for India

The Benami Transactions Bill

• Amendment of Benami Transactions Act, 1988
• Passed in Lok Sabha by Finance Minister Mr. Arun Jaitley
• Description of Benamidar revised
• Penalty for giving false information through Benamis leads to imprisonment of 6 months to 5 years
• Fine up to 10 percent of the benami property market value

Four main authorities established to investigate or conduct inquiries

• Initiating officer
• Approving officer
• Administrator and
• Adjudicating officer

Emerging Issues

• Strong and quick implementation of the acts
• Political Interference
• Corrupt officers
• Willful defaulters on the rise – Mr. Subroto Roy, Mr. Vijay Mallya etc.
• Participatory notes are the main source of terror financing
• No mention on Participatory notes in the amendments and bills introduced so far
• Havala scandal cases
• Illegal trading activities
• Stock market scandals
• Smuggling and money transfer
• Counterfeit currency
• Bank Scandals