Fresh Look at One of India's Toughest Tax Laws After a Decade
The government has initiated a comprehensive review of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA) - one of India's most stringent anti-evasion laws amid growing concerns over its overlap with the Income Tax Act and its impact on genuine taxpayers.
An internal committee headed by Amal Pusp, Principal Chief Commissioner of Income Tax for the Uttar Pradesh (East) region, has been tasked with examining the law's effectiveness, its interaction with existing tax regulations, and challenges faced in implementation.
The panel will also assess the handling of the massive volumes of offshore financial data India receives under global information-exchange agreements, and identify potential conflicts between the BMA and the Income Tax Act.
A second internal panel led by Chief Commissioner Jayaram Raipura will simultaneously work on improving the quality of scrutiny assessments across the tax administration.
Why the Black Money Law Is Under the Scanner
Introduced on July 1, 2015, the Black Money Act was designed to unearth hidden offshore assets and penalize individuals and entities holding undisclosed income abroad. It was one of the early flagship reforms of the Modi government's anti-corruption drive.
However, despite its tough provisions - including a 30% tax and 90% penalty (a combined 120% liability) and the power to initiate criminal prosecution for mere non-disclosure, the law has not delivered the expected results in terms of actual tax recovery.
Officials admit that while the law created a strong deterrent effect, enforcement challenges and legal ambiguities have limited its reach.
Retroactive Provisions and Legal Concerns
One of the most controversial features of the BMA is its retrospective power. The law allows tax authorities to probe foreign assets acquired decades ago if discovered now, treating the year of discovery as the year of income.
Under the Income Tax Act, reassessment is generally limited to three to five years, but under the BMA, authorities can go back indefinitely, a move critics say violates principles of natural justice.
Tax experts have urged the government to reconsider Section 72(c), which removes time-bar restrictions. Many taxpayers are unable to produce records for assets created long before the law existed, leading to unintended hardships for individuals with legitimate overseas holdings.
Calls for a Balanced Approach
Tax practitioners argue that while the government must continue targeting habitual offenders, genuine taxpayers who inadvertently failed to disclose assets, such as those acquired during employment abroad should not be penalized harshly.
Experts have also suggested that the government consider a new one-time disclosure or settlement scheme, allowing taxpayers to regularize undisclosed foreign assets voluntarily. A similar scheme in 2015 had debarred many willing declarants.
"There are many cases where taxpayers are willing to settle and pay taxes. A fresh disclosure window could help both sides, easing litigation and boosting revenue," a senior tax advisor said.
Broader Implications
If the committee recommends amendments, it could mark the first major reform of the Black Money Act in nearly a decade. Any relaxation or clarification in provisions, particularly regarding retroactive taxation, penalty thresholds, and prosecution triggers would significantly impact India's approach to global tax transparency and compliance.
For now, all eyes are on the Amal Pusp committee's report, expected to set the tone for the next phase of India's anti-black money framework.
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