The Central Government, on May 26, 2015, had enacted the Black
Money (Undisclosed Foreign Income and Assets) and Imposition of Tax
Act, 2015 (the "Black Money Act") to
deal with undisclosed assets held abroad, acquired from income
otherwise liable to be disclosed and chargeable to tax in India, by
providing for a separate taxation mechanism.
Enabling RBI regulatory framework for dealing with
undisclosed assets held abroad:
Pursuant to the Black Money Act, in respect of undisclosed
assets held abroad by a person resident in India for which,
inter alia, applicable taxes and penalties have been paid
under the Black Money Act, the RBI has now issued (and notified)
the Foreign Exchange Management (Regularization of assets held
abroad by a person resident in India) Regulations, 2015 (the
"FEMA Undisclosed Assets Regularization Regulations,
2015") with a view to provide an enabling regulatory
framework for regularization of contraventions occurred under the
Foreign Exchange Management Act, 1999 (the
"FEMA") in the process of acquiring such
undisclosed assets abroad.
Pertinent provisions under the FEMA Undisclosed Assets
Regularization Regulations, 2015:
Immunity to proceedings under the FEMA has been granted in
respect of undisclosed assets held abroad for which, inter alia,
tax and penalty has been paid under the Black Money Act; and
From a period within 180 days from date of declaration of
undisclosed assets under Black Money Act-
(i) without RBI approval, such an asset can be disposed off and
proceeds thereof to be brought back to India through normal banking
(ii) apply for RBI approval under FEMA and/or regulations made
thereunder, wherever applicable, if such an asset is sought to be
held abroad. In the event, the RBI approval is not granted, such
asset would have to be disposed off within 180 days from date of
receipt of RBI denial (or any extension of period of 180 days, if
permitted) and proceeds thereof be brought back to India through
normal banking channels.
It can be concluded, broadly, the FEMA Undisclosed Assets
Regularization Regulations, 2015 is a shot in the arm for
persons/entities in violation of FEMA regulations, wherein heavy
penalties are otherwise imposed for contraventions (even
imprisonment, confiscation of assets in certain cases) and
cumbersome Enforcement Directorate investigations/proceedings to be
dealt with and, therefore, be in compliance thereof and put an end
to the undisclosed assets abroad issue, permanently.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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