Amnesty scheme for students, tech employees, small taxpayers failing to declare foreign assets

Finance Minister Nirmala Sitharaman on Sunday announced an amnesty scheme for small taxpayers like students, young professionals, tech employees, and relocated NRIs, who have failed to disclose foreign income or assets in income tax returns.

Finance Minister Nirmala Sitharaman on Sunday announced an amnesty scheme for small taxpayers like students, young professionals, tech employees, and relocated NRIs, who have failed to disclose foreign income or assets in income tax returns. A one-time 6-month foreign asset disclosure scheme will be applicable for two categories of taxpayers -- who did not disclose their overseas income or asset and who disclosed their overseas income and/or paid due tax, but could not declare the asset acquired. However, cases involving prosecution or proceeds of crime are proposed to be excluded from the scheme. As per the scheme, taxpayers having undisclosed overseas income/assets up to Rs 1 crore, will be required to pay 30 per cent of the undisclosed income or fair market value of the asset, and a 30 per cent additional income tax in lieu of penalty to escape prosecution. For taxpayers who have disclosed their income but did not declare their assets up to Rs 5 crore will have immunity from penalty and prosecution after payment of a fee of Rs 1 lakh. Under existing legislation dealing with foreign blackmoney, such violations attract a penalty of Rs 10 lakh and prosecution. Sitharaman said the move to come out with an amnesty scheme was aimed at addressing practical issues of small taxpayers like students, young professionals, tech employees, relocated NRIs, and such others. ''I propose to introduce a one-time 6-month foreign asset disclosure scheme for these taxpayers to disclose income or assets below a certain size,'' she said. The Explanatory Memorandum to the Budget, said that it has been observed that non-compliance with foreign blackmoney act is particularly prevalent in cases involving legacy or inadvertent non-disclosures for small taxpayers, including holdings arising from foreign employment benefits such as ESOPs or RSUs, dormant or low-value foreign bank accounts of former students, savings or insurance policies of returning non-residents, and assets held by individuals on overseas deputation. Further, information received under the Automatic Exchange of Information framework indicates non-disclosure of foreign financial assets by a significant number of PAN holders.

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